Conference report makes the following changes to the 6th edition:

Changes the long title.

Adds Part titles to the bill.

Amends proposed GS 114-9.7, concerning oversight of third-party contracting by the Attorney General, to provide clarifying language that the report due by February 1 is only due following a year in which a state agency has entered into a contingency fee contract with a private attorney.

Provides an effective date for proposed GS Chapter 114, Article 2A, and for clarifying language adding to GS 114-2.3, concerning limited use of private counsel, providing that the sections are effective when they become law, applying to any contract to retain private counsel authorized by the Attorney General entered into on or after that date.

Amends GS 75-137 and GS 75-138, concerning patent abuse assertions, making clarifying changes. 

Amends GS 75-141, concerning enforcement, remedies, and damages for patent abuse assertions, providing that persons who have caused another to deliver or send a demand to a target in North Carolina is subject to suit in North Carolina.

Enacts new GS 55-7-50, Exclusive forum or venue provisions valid, providing that a provision in the articles of incorporation or bylaws of a corporation that specifies a forum/venue in North Carolina as the exclusive forum/venue for litigation concerning the internal affairs of the corporation are valid and enforceable. 

Amends GS Chapter 99E by adding new Article 5, Successor Asbestos-Related Liability.

Adds new GS 99E-40 (Definitions), providing the terms and definitions to be used in this Article, including asbestos claim, corporation, successor, successor asbestos-related liability, transferor.

Creates new GS 99E-42 (Limitation on successor asbestos-related liability), providing that, except as further limited in the statute, the cumulative successor asbestos-related liabilities of a successor corporation are limited to the fair market value of the total gross assets of the transferor, determined at the time of the merger/consolidation. No successor or asbestos-related liabilities are available in excess of this limitation. If a transferor assumes or incurs successor asbestos-related liabilities in connection with a prior merger/consolidation with a prior transferor, the fair market value of the total assets of the prior transferor determined at the time of the earlier merger or consolidation will be substituted for the limitation described above for purposes of determining the limitation of liability of a successor corporation.

Creates new GS 99E-41 (Applicability), establishing that the limitations in GS 99E-42 apply to any successor except for (1)  certain workers' compensation benefits, (2) claims against a corporation that are not considered a successor asbestos-related liability, (3) any obligation under 29 USC 151 or under any collective bargaining agreement, (4) certain successors that continued in the business of mining asbestos or in named related asbestos businesses.

Creates new GS 99E-43 (Establishing fair market value of total gross assets). Allows a successor corporation to establish fair market value of total gross assets for the purpose of limitations under GS 99E-35 through any one of the following methods: (1) by reference to the going concern value of the assets or to the purchase price attributable to or paid for the assets in an arms-length transaction or (2) in the absence of other readily available information from which the fair market value can be determined, by reference to the value of the assets recorded on a balance sheet.

Provides that total gross assets include intangible assets. Sets other conditions to the extent that total gross assets include any liability insurance that was issued to the transferor whose assets are being valued for purposes of this section, no insurance or other obligations will be affected.

Creates new GS 99E-44 (Adjustment), providing that the fair market value of total gross assets at the time of the merger/consolidation will increase annually at a rate equal to the sum of (1) the prime rate as listed in the Wall Street Journal for each calendar year since the merger/consolidation and (2) 1 percent.

The above calculation is subject to the following limitations: (1) the rate defined above cannot be compounded, (2) the adjustment of the fair market value of total gross assets will continue as provided above until the adjusted value is first exceeded by the cumulative amounts of successor asbestos-related liabilities paid or committed to be paid, and (3) no adjustment can be applied to any liability insurance that may be included in the definition of total gross assets in GS 99E-43.

Creates new GS 99E-45 (Scope of Article; application), providing that the article will be liberally construed with regard to successors and it will apply to all asbestos claims filed against a successor on or after the effective date of this act. 

Provides an effective date of January 1, 2015, for the above asbestos related provisions.

The House amendment to the 5th edition makes the following changes. Adds the following:

Enacts new GS Chapter 75, Article 8, Abusive Patent Assertions, with the purpose of curbing bad-faith assertions of patent infringement.  Provides nine findings regarding patents in North Carolina, including that abusive patent litigation and bad-faith infringement claims can harm NC companies and that North Carolina has a strong interest in protecting its citizens and businesses against abusive patent assertions. Provides that the General Assembly seeks to strike a balance between (1) the interest of efficient and prompt resolution of patent infringement claims, the protection of NC businesses from abusive and bad-faith assertions of patent infringement, and building the NC economy and (2) the intent to respect federal law and not interfere with legitimate patent enforcement claims. Provides that nothing in the act is intended to alter current law concerning personal liability of principals in business entities.

Sets out definitions to be used in this Article, including affiliate, demand, institution of higher education, target, interested party, and operating entity.

Sets out twelve factors that the court can consider as evidence that a person has made a bad-faith assertion of patent infringement, including the person demands payment of a license fee or response within an unreasonably short period of time, the person making the claim or assertion sent the same demand to multiple recipients, as well as any other factors the court finds relevant.

Also sets out seven factors the court can consider as evidence that a person has not made a bad-faith assertion of patent infringement, including that the person engages in a good-faith effort to establish that the target has infringed the patent and to negotiate an appropriate remedy, the person has demonstrated good-faith business practices in previous efforts to enforce the patent, as well as any other factors the court finds relevant.  

Provides that activities relating to advising others of ownership or right of license, communicating that the patent is available for license or sale, notifying others of the infringement of the patent, or seeking compensation on account for past or present infringement/license to a patent will not be deemed unlawful for any person who has the right to license or enforce a patent to do these activities, when not carried out in bad faith.

Requires a bond to be posted in an amount equal to a good-faith estimate of the target’s fees and costs to litigate the claim and reasonable recoverable amounts when the court has found a reasonable likelihood that a person has made a bad-faith assertion of patent infringement.  A hearing on the bond requirement can be requested by either party.  No bond issued can exceed $500,000.  Court is authorized to waive the bond requirement upon a finding that the person has available assets equal to the proposed bond amount or waive it for any other good cause.

Sets out regulations for enforcement, remedies, and damages, providing that the Attorney General has the same authority to make rules, conduct investigations, and bring civil actions under these new provisions as provided in the Article.  Provides that a target or person aggrieved by a violation of these regulations can bring an action in Superior Court. Remedies include equitable relief, damages, costs, and fees (including reasonable attorneys' fees), and exemplary damages in an amount of $50,000 or three times the total of damages, costs, and fees, whichever is greater. Allows the court to award a prevailing defendant costs and fees, if the action was not well grounded in fact and warranted by existing law or was interposed for any improper purpose.

Provides for  joinder of interested parties as well as establishing that any person making demands on a target has purposefully availed themselves of doing business in North Carolina and thus is subject to suit and jurisdiction in North Carolina, regardless of other business conducted in the state.  Provides that interested parties that joined the action through the joinder clause can be held jointly and severally liable for any amount awarded.  States that the rights or authority of North Carolina or the Attorney General are not limited in regards to conduct involving assertions of patent infringement.

All of the above is effective when bill becomes law, applying to actions commenced on or after that date and demands made on or after that date.

Senate amendments to the 3rd edition make the following changes.

Amendment #1 

Amends proposed GS 114-9.5 to provide that the Attorney General may give permission for a state agency to enter into a contingency fee contract that provides for the private attorney to receive an aggregate contingency fee in excess of specified percentages, depending on the amount of damages (was, may not give permission for a state agency to enter into a contingency fee contract that provides for the private attorney to receive a contingency fee in excess of 22.5 percent). Caps the aggregate contingency fee at $50 million. 

Amendment #2 

Adds a new part to the bill as follows. Enacts new GS 99B-13, creating a rebuttable presumption that the manufacturer did not fail to provide an adequate warning when, in a product liability action against a drug manufacturer, the drug that is alleged to cause harm was approved by the US Food and Drug Administration and the drug and its labeling were in compliance with the US Food and Drug Administration's approval at the time the drug left the manufacturers's control. The presumption may be rebutted by a preponderance of the evidence. Provides that the section does not apply if the claimant proves that the manufacturer, at any time before the event that allegedly caused the harm, did any of three specified activities. The section applies only to product liability claims alleging that a drug manufacturer failed to provide an adequate warning.

Applies to actions commenced on or after October 1, 2014. 

Amendment #3

Amends GS Chapter 99E by adding new Article 5, Successor Asbestos-Related Liability.

Adds new GS 99E-40 (Definitions), providing the terms and definitions to be used in this Article, including asbestos claim, corporation, successor, successor asbestos-related liability, and transferor.

Creates new GS 99E-42 (Limitation on successor asbestos-related liability), providing that, except as further limited in the statute, the cumulative successor asbestos-related liabilities of a successor corporation are limited to the fair market value of the total gross assets of the transferor, determined at the time of the merger/consolidation. No successor or asbestos-related liabilities are available in excess of this limitation. If a transferor assumes or incurs successor asbestos-related liabilities in connection with a prior merger/consolidation with a prior transferor, the fair market value of the total assets of the prior transferor determined at the time of the earlier merger or consolidation will be substituted for the limitation described above for purposes of determining the limitation of liability of a successor corporation.

Creates new GS 99E-41 (Applicability), establishing that the limitations in GS 99E-42 apply to any successor except for (1)  certain workers' compensation benefits, (2) claims against a corporation that are not considered a successor asbestos-related liability, (3) any obligation under 29 USC 151 or under any collective bargaining agreement, (4) certain successors that continued in the business of mining asbestos or in named related asbestos businesses.

Creates new GS 99E-43 (Establishing fair market value of total gross assets). Allows a successor corporation to establish fair market value of total gross assets for the purpose of limitations under GS 99E-35 through any one of the following methods: (1) by reference to the going concern value of the assets or to the purchase price attributable to or paid for the assets in an arms-length transaction or (2) in the absence of other readily available information from which the fair market value can be determined by reference to the value of the assets recorded on a balance sheet.

Provides that total gross assets include intangible assets. Sets other conditions to the extent that total gross assets include any liability insurance that was issued to the transferor whose assets are being valued for purposes of this section, no insurance or other obligations will be affected.

Creates new GS 99E-44 (Adjustment), providing that the fair market value of total gross assets at the time of the merger/consolidation will increase annually at a rate equal to the sum of (1) the prime rate as listed in the Wall Street Journal for each calendar year since the merger/consolidation and (2) one percent.

The above calculation is subject to the following limitations: (1) the rate defined above cannot be compounded, (2) the adjustment of the fair market value of total gross assets will continue as provided above until the adjusted value is first exceeded by the cumulative amounts of successor asbestos-related liabilities paid or committed to be paid, and (3) no adjustment can be applied to any liability insurance that may be included in the definition of total gross assets in GS 99E-43.

Creates new GS 99E-45 (Scope of Article; application), providing that the article will be liberally construed with regard to successors and it will apply to all asbestos claims filed against a successor on or after the effective date of this act. 

Effective January 1, 2015.

Makes conforming changes to the act's title.