Bill Summary for H 1032 (2013-2014)

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Summary date: 

May 14 2014

Bill Information:

View NCGA Bill Details2013-2014 Session
House Bill 1032 (Public) Filed Wednesday, May 14, 2014
Intro. by Murry.

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Bill summary

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.