S. 2049 — Introduced in Senate

II 113th CONGRESS 2d Session S. 2049 IN THE SENATE OF THE UNITED STATES February 26, 2014Mrs. McCaskill (for herself and Mr. Rockefeller) introduced the following bill; which was read twice and referred to the Committee on Commerce, Science, and Transportation A BILL To curb unfair and deceptive practices during assertion of patents, and for other purposes. 1. Short title This Act may be cited as the Transparency in Assertion of Patents Act. 2. Transparency in assertion of patents (a) Disclosures The Federal Trade Commission (referred to in this Act as the Commission) shall promulgate rules to prohibit unfair or deceptive acts and practices in the sending of written communication that states that the intended recipient of the written communication, or any person affiliated with the intended recipient, is infringing or may be infringing the patent of and bears liability or owes compensation to another. Such rules shall establish the disclosures that a written communication to which this subsection applies must contain, including— (1) a detailed description of— (A) each patent allegedly infringed, including the patent number; and (B) each claim of each patent that is allegedly infringed; (2) a clear, accurate, and detailed description, such as the manufacturer and model number, of each product, device, business method, service, or technology that allegedly infringes each claim under paragraph (1)(B) or that is covered by that claim; (3) a clear, accurate, and detailed description of how a product, device, business method, service, or technology under paragraph (2) allegedly infringes a patent or claim under paragraph (1); (4) notice to the intended recipient that the intended recipient may have the right to have the manufacturer under paragraph (2) defend against the alleged infringement; (5) a name, an address, and any other contact information necessary for an intended recipient to determine the identity of a person with the right to enforce a patent described under paragraph (1) or with a direct financial interest in a patent described under paragraph (1), including each owner, co-owner, assignee, exclusive licensee, and entity with the authority to enforce the patent, and the ultimate parent entity (as defined in section 801.1(a)(3) of title 16, Code of Federal Regulations, or any successor regulation) of each owner, co-owner, assignee, exclusive licensee, and entity with the authority to enforce the patent; (6) a description of any licensing commitment or obligation, such as reasonable and non-discriminatory terms, that applies to a patent or claim under paragraph (1); (7) if compensation is proposed, the method used to calculate that proposed amount; (8) each current instance of reexamination or other post-grant review of each patent described under paragraph (1) at the Patent and Trademark Office, any past or ongoing litigation involving the patent, and the status of such review and any determinations as to the invalidity of the patent or any of its claims; and (9) other disclosures that the Commission considers necessary to carry out the purpose of this Act. (b) Exemptions The rules promulgated by the Commission under subsection (a) may exempt from any requirement of that subsection written communication between parties regarding existing licensing agreements, and any other written communication, that the Commission determines is not necessary for the protection of consumers or within the scope of the purposes of this Act. (c) Unfair or deceptive assertions The Commission shall promulgate rules to prohibit unfair or deceptive assertions in written communication to which subsection (a) applies. Such rules shall specify the actions that constitute an unfair or deceptive assertion, including— (1) an assertion that falsely threatens administrative or judicial relief will be sought if compensation is not paid or the infringement is not otherwise resolved; (2) an assertion that lacks a reasonable basis in fact or law; and (3) an assertion that is likely to materially mislead a reasonable intended recipient. (d) Consumer education The Commission shall provide education and awareness to the public regarding unfair or deceptive patent assertions. (e) Rulemaking The Commission shall promulgate the rules under this Act in accordance with section 553 of title 5, United States Code. (f) Enforcement by the Commission A violation of a rule promulgated under this Act shall be treated as a violation of a rule defining an unfair or deceptive act or practice under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)). The Commission shall enforce this Act in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this Act. Any person who violates this Act shall be subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act (15 U.S.C. 41 et seq.). (g) Enforcement by State attorneys general (1) Civil action In any case in which the attorney general of a State, or an official or agency of a State, has reason to believe that an interest of the residents of that State has been or is threatened or adversely affected by engagement of any person subject to a rule promulgated under this Act in a practice that violates the rule, the attorney general, official, or agency of the State, as parens patriae, may bring a civil action on behalf of the residents of the State in an appropriate district court of the United States— (A) to enjoin further violation of the rule by the defendant; (B) to compel compliance with the rule; (C) to obtain damages, restitution, or other compensation on behalf of such residents; (D) to obtain such further and other relief as the court considers appropriate; or (E) to obtain civil penalties in the amount determined under paragraph (2). (2) Civil penalties (A) Calculation For purposes of imposing a civil penalty under paragraph (1)(E), the amount determined under this paragraph is the amount calculated by multiplying the number of separate violations of a rule by an amount not greater than $16,000. (B) Adjustment for inflation Beginning on the date that the Consumer Price Index is first published by the Bureau of Labor Statistics that is after 1 year after the date of enactment of this Act, and each year thereafter, the amount specified in subparagraph (A) shall be increased by the percentage increase in the Consumer Price Index published on that date from the Consumer Price Index published the previous year. (3) Intervention by the Commission (A) Notice and intervention The State shall provide prior written notice of any civil action under paragraph (1) to the Commission and provide the Commission with a copy of its complaint, except in any case in which such prior notice is not feasible, in which case the State shall serve such notice immediately upon commencing such action. The Commission shall have the right— (i) to intervene in the civil action; (ii) upon so intervening, to be heard on all matters arising in the civil action; and (iii) to file petitions for appeal of a decision in the civil action. (B) Limitation on State action while Federal action is pending If the Commission has instituted a civil action for violation of this Act, no State attorney general, or official or agency of a State, may bring an action under this subsection during the pendency of that action against any defendant named in the complaint of the Commission for any violation of this Act alleged in the complaint. (4) Construction For purposes of bringing any civil action under paragraph (1), nothing in this Act shall be construed to prevent an attorney general of a State from exercising the powers conferred on the attorney general by the laws of that State to conduct investigations, to administer oaths or affirmations, or to compel the attendance of witnesses or the production of documentary and other evidence. (h) Rule of construction Nothing in this Act shall be construed as limiting or otherwise affecting in any way— (1) any other authority of the Commission; or (2) the application of title 35, United States Code, or any other provision of law relating to patents.