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December 01, 2013

House focuses on abusive patent litigation

The House passed legislation Dec. 5 that seeks to reduce abusive litigation practices in patent cases, but the ABA is urging Congress to address the issue instead through the Rules Enabling Act, a rulemaking process that has served the justice system well for almost 80 years.

H.R. 3309, passed by a 325-91 vote, includes proposed changes in the Patent Code as codified in Title 35 of the U.S. Code and other provisions of federal law. The proposed changes are directed toward practices by litigants that have come to be identified as “patent assertion entities” or “patent trolls,” entities that acquire and hold patents not for commercial exploitation but primarily, if not solely, to sue for monetary relief or extortionist settlements.

 “The ABA agrees that changes in court procedures relating to pleadings, disclosure of real parties in interest, joinder of parties, and discovery can improve the administration of justice in our nation’s federal courts, including in patent cases,” ABA Governmental Affairs Director Thomas M. Susman wrote in a Nov. 14 letter to House Judiciary Committee Chairman Robert W. Goodlatte (R-Va.) and Ranking Member John Conyers Jr.  (D-Mich.).

He added, however, that the ABA opposes enactment of H.R. 3309 and urges further revision of the legislation to achieve these objectives.

Under the Rules Enabling Act, the Judicial Conference of the United States drafts proposed rules and amendments, makes them available for public comment, and submits them to the U.S. Supreme Court after Judicial Conference approval. The Supreme Court submits the proposals to Congress, which retains the final authority to reject, modify or defer any rule or amendment before it takes effect.

H.R. 3309 circumvents the Rules Enabling Act in two ways: direct legislative enactment of rules of procedures and case management; and statutory direction to the Judicial Conference or the Supreme Court to develop particular rules and procedures specified in the bill for patent cases.

 “By mandating particular rules of procedures applicable only to patent cases, the legislation calls for the same issues to be governed by different rules in patent cases than in all other civil cases,” Susman wrote.

 “This unhealthy precedent could prompt calls to Congress to provide special rules of procedure for still other areas of the law, leading to the balkanization in the administration of justice – precisely the result that the Rules Enabling Act process was designed by Congress to avoid,” he said.

Susman noted that the ABA supports the “commendable” objectives of the bill to make it more difficult for ill-founded patent suits to succeed and to make it easier to identify and dispose of those suits more promptly and less expensively.

The legislation, however, may have the unintended result of creating more delay and expense, he said.

Following House passage of H.R. 3309, Senate Judiciary Committee Chairman Patrick J. Leahy (D-Vt.) announced that his committee will hold a Dec. 17 hearing on the issue. Leahy and Sen. Mike Lee (R-Utah) have introduced S. 1720, a bill to address the patent issues through Federal Trade Commission enforcement rather than through changes in court rules.

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