PATENT ABUSE BILL

View NCGA Bill Details2013-2014 Session
House Bill 1032 (Public) Filed Wednesday, May 14, 2014
A BILL TO BE ENTITLED AN ACT TO PREVENT THE ABUSIVE USE OF PATENTS.
Intro. by Murry.

Status: Ref To Com On Rules and Operations of the Senate (Senate Action) (Jun 4 2014)
H 1032

Bill Summaries:

  • Summary date: Jun 3 2014 - More information

    House amendment makes the following changes to the 3rd edition:

    Enacts new subsection in proposed GS 75-141, concerning remedies and damages for abusive patent assertions, that provides that a court may award a defendant who prevailed in actions pursuant to this section certain costs and fees, including reasonable attorneys' fees, if the court finds that the action was not well grounded in fact and warranted by existing law, or was interposed for any improper purposes.

    Makes conforming changes.


  • Summary date: May 28 2014 - More information

    The House committee substitute to the 2nd edition makes the following changes. Amends the General Assembly's findings in GS 75-137 to provide that the expense of patent litigation can be a significant burden on all companies (was, on small- and medium-sized companies). Amends GS 75-139 to make clarifying changes. Amends GS 75-141 to make language gender neutral. 


  • Summary date: May 21 2014 - More information

    House committee substitute makes the following changes to the 1st edition:

    Makes a technical change.

    Includes a provision providing that nothing in this act is intended to alter current law regarding piercing the corporate veil.

    Amends the definition section for Article 8, adding the term affiliate to the definitions list. Makes organizational changes.

    Expands section providing that this new Article does not apply to specified types of demand letters or assertions.

    Amends bond provisions, providing that persons that fail to prove a patent infringement and that fail to pay all or part of any fee or cost ordered by the court within 30 days will have the owed amount paid out of the bond. Makes technical changes.

    Deletes previous changes to GS 14-118.4, Extortion.

    Makes conforming changes.


  • Summary date: May 14 2014 - More information

    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.

    Sets out definitions to be used in this Article, including demand, target, and interested party.

    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 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 Chapter.  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.

    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.

    Amends GS 14-118.4, Extortion, providing that a person is guilty of extortion when intentionally obtaining or attempting to obtain property of another by making or threatening to make an abusive patent assertion. Effective December 1, 2014, applying to offenses committed on or after that date.


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