Sec. 7. Fees and other expenses
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It is the sense of Congress that, in patent cases, reasonable attorney fees should be paid by a non-prevailing party whose litigation position or conduct is not objectively reasonable. As the Supreme Court wrote in adopting this legal standard in the context of fee shifting under section 1447 of title 28, United States Code, this standard is intended to strike a balance; in patent cases, a more appropriate balance between protecting the right of a patent holder to enforce its patent on the one hand, and deterring abuses in patent litigation and threats thereof on the other.
Section 285 of title 35, United States Code, is amended to read as follows: In connection with a civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, upon motion by a prevailing party, the court shall determine whether the position of the non-prevailing party was objectively reasonable in law and fact, and whether the conduct of the non-prevailing party was objectively reasonable. If the court finds that the position of the non-prevailing party was not objectively reasonable in law or fact or that the conduct of the non-prevailing party was not objectively reasonable, the court shall award reasonable attorney fees to the prevailing party unless special circumstances would make an award unjust.
A party to a civil action who asserts a claim for relief arising under any Act of Congress relating to patents against another party, and who subsequently unilaterally
(i)seeks dismissal of the action without consent of the other party and
(ii)extends to such other party a covenant not to sue for infringement with respect to the patent or patents at issue, may be the subject of a motion for attorney fees under subsection
(a)as if it were a non-prevailing party, unless the party asserting such claim would have been entitled, at the time that such covenant was extended, to dismiss voluntarily the action without a court order under rule 41 of the Federal Rules of Civil Procedure, or the interests of justice require otherwise. A party defending against a claim of infringement may file, not later than 14 days before a scheduling conference is to be held or a scheduling order is due under rule 16(b) of the Federal Rules of Civil Procedure, a statement that such party holds a good faith belief, based on publicly-available information and any other information known to such party, that the primary business of the party alleging infringement is the assertion and enforcement of patents or the licensing resulting therefrom. Not later than 45 days after being served with an initial statement under subparagraph (A), a party alleging infringement shall file a certification that— establishes and certifies to the court, under oath, that it will have sufficient funds available to satisfy any award of reasonable attorney fees under this section if an award is assessed; demonstrates that its primary business is not the assertion and enforcement of patents or the licensing resulting therefrom; identifies interested parties, if any, as defined in paragraph
(2)of this subsection; or states that it has no such interested parties. A party alleging infringement shall have an ongoing obligation to supplement its certification under this subparagraph within 30 days after a material change to the information provided in its certification. A party that files a certification under subparagraph (B)(iii) shall, prior to filing the certification, provide each identified interested party actual notice in writing by service of notice in any district where the interested party may be found, such that jurisdiction shall be established over each interested party to the action for purposes of enforcing an award of attorney fees under this section, consistent with the Constitution of the United States. The notice shall identify the action, the parties, the patents at issue, and the interest qualifying the party to be an interested party. The notice shall inform the recipient that the recipient may be held accountable under this subsection for any award of attorney fees, or a portion thereof, resulting from the action in the event the party alleging infringement cannot satisfy the full amount of such an award, unless the recipient renounces its interest pursuant to subparagraph
(E)or is otherwise exempt from the applicability of this subsection. Any interested parties who are timely served with actual notice pursuant to subparagraph
(C)and do not renounce their interests pursuant to subparagraph
(E)or are not otherwise exempt from the applicability of this subsection may be held accountable for any fees, or a portion thereof, awarded under this section in the event that the party alleging infringement cannot satisfy the full amount of the award. If a true and correct certification under clause
(i)or
(ii)of subparagraph
(B)is timely filed with the court, interested parties shall not be subject to this subparagraph. Any recipient of a notice under subparagraph
(C)may submit a statement of renunciation of interest in a binding document with notice to the court and parties in the action not later than 120 days after receipt of the notice under subparagraph (C). The statement shall be required to renounce only such interest as would qualify the recipient as an interested party. Any institution of higher education (as defined in section 101(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1001(a) ) or under equivalent laws in foreign jurisdictions), or a non-profit technology transfer organization whose primary purpose is to facilitate the commercialization of technologies developed by 1 or more institutions of higher education, may exempt itself from the applicability of this subsection by filing a certification that it qualifies for the exception provided for in this subparagraph with the court and providing notice to the parties. Any recipient of a notice under subparagraph
(C)may intervene in the action for purposes of contesting its identification as an interested party or its liability under this subsection, and a court may exempt any party identified as an interested party from the applicability of this subsection as the interest of justice requires. In this section, the term interested party — means a person who has a substantial financial interest related to the proceeds from any settlement, license, or damages award resulting from the enforcement of the patent in the action by the party alleging infringement; does not include an attorney or law firm providing legal representation in the action if the sole basis for the financial interest of the attorney or law firm in the outcome of the action arises from the attorney or law firm’s receipt of compensation reasonably related to the provision of the legal representation; does not include a person who has assigned all right, title, and interest in a patent, except for passive receipt of income, to an entity described in paragraph (1)(F), or who has a right to receive any portion of such passive income; and does not include a person who would be an interested party under subparagraph
(A)but whose financial interest is based solely on an equity or security interest established when the party alleging infringement’s primary business was not the assertion and enforcement of patents or the licensing resulting therefrom. e ) Subsections (a), (b), and
(c)shall not apply to a civil action that includes a claim for relief arising under section 271(e). 271(e) In a civil action that includes a claim for relief arising under section 271(e), the court may in exceptional cases award reasonable attorney fees to the prevailing party. . The item relating to section 285 of the table of sections for chapter 29 of title 35, United States Code, is amended to read as follows: 285. Fees and other expenses. . Section 273 of title 35, United States Code, is amended by striking subsections
(f)and (g). The amendments made by this section shall take effect on the date of enactment of this Act and shall apply to any action filed on or after such date.
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Sec. 7
Fees and other expenses
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