The Protecting American Talent and Entrepreneurship Act (PATENT Act)
Short Summary
Abusive patent litigation is a threat to our innovation economy, costing businesses
consumers billions of dollars each year. Abusive actors file frivolous lawsuits; send
vague demand letters; and rely on weaknesses in the patent litigation system (and
its high cost) – not the merits – to extort expensive settlements. The Protecting
American Talent and Entrepreneurship Act (the PATENT Act) makes necessary
and commonsense reforms to stop abusive patent litigation practices and prevent
bad actors from further undermining the system that made the United States one of
the most dynamic and innovative countries in the world.

KEY PROVISIONS CONTAINED IN THE PATENT ACT:
Clarifies Pleading Standards. The bill would establish clear, uniform standards
for pleading in patent infringement suits to give defendants real notice of the claims
against them, and keep meritless lawsuits from clogging federal court dockets. It
also increases transparency by requiring early disclosures about the patent-in-suit.
Protects End Users. The bill protect customers who are targeted for patent
infringement based on a product they simply purchased from a manufacturer or off
the shelf by allowing the stay of an infringement case against an end user of a
product while the manufacturer of the product litigates the alleged infringement.
Reasonably Limits Early Discovery. The legislation protects litigants from the
threat of expensive discovery by requiring a court to stay discovery while it resolves
key early motions in the case, including motions to dismiss and transfer venue. The
bill also directs the Judicial Conference to develop rules about how much a party
should bear the cost of discovery beyond what is core for the case.
Creates Risk for Bad Actors. In order to deter plaintiffs and defendants from
engaging in abusive and dilatory litigation practices, the bill provides that
reasonable attorney fees will be awarded if the winner proves and a court rules that
the losing party was not “objectively reasonable.” The legislation provides a process
to recover fees where the abusive litigant is hiding behind a shell company.
Curbs Abusive Demand Letters. The legislation adds requirements that
demand letters contain meaningful information so they cannot be used merely to
scare recipients into early settlements. The bill also heightens penalties for those
found to violate the FTC Act by sending misleading demand letters.
Increases Transparency. The bill requires the PTO to keep information about
patent ownership in order to provide a resource about patents being asserted in a
demand letter or lawsuit.
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