99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB2887

 

Introduced 2/18/2016, by Sen. Ira I. Silverstein

 

SYNOPSIS AS INTRODUCED:
 
815 ILCS 505/2SSS

    Amends the Consumer Fraud and Deceptive Business Practices Act in relation to patent infringement claims. Provides that it is unlawful to make bad faith patent claims rather than to issue unfair or deceptive patent infringement demand letters. Defines terms. Provides that a target of a bad faith patent claim may obtain equitable relief, damages, costs, attorney's fees, and punitive damages. Provides that a target may seek to require the person making the patent infringement claim to post a bond. Sets forth criteria for determining whether a claim is a bad faith claim. Authorizes the Attorney General to bring an action to enjoin violations.


LRB099 19263 JLS 43655 b

 

 

A BILL FOR

 

SB2887LRB099 19263 JLS 43655 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Consumer Fraud and Deceptive Business
5Practices Act is amended by changing Section 2SSS as follows:
 
6    (815 ILCS 505/2SSS)
7    Sec. 2SSS. Bad faith Unfair or deceptive patent
8infringement demand letters.
9    (a) As used in this Section:
10    "Demand letter" means a letter, an e-mail, or other written
11communication asserting that a target has engaged in patent
12infringement.
13    "Person" means a natural person, corporation, trust,
14partnership, incorporated or unincorporated association, or
15any other legal entity.
16    "Target" means a person:
17        (1) who has received a demand letter;
18        (2) against whom a lawsuit has been filed alleging
19    patent infringement; or
20        (3) whose customers have received a demand letter
21    asserting that the person's product, service, or
22    technology has infringed a patent.
23    (b) A person may not make a bad faith assertion of patent

 

 

SB2887- 2 -LRB099 19263 JLS 43655 b

1infringement against another person.
2    (c) A target may bring a civil action in circuit court
3against a person who has made a bad faith assertion of patent
4infringement against the target.
5    (d) In determining whether a person made a bad faith
6assertion of patent infringement, the court may consider the
7following factors as evidence that the person made a bad faith
8assertion of patent infringement:
9        (1) The demand letter does not contain:
10            (A) the patent number;
11            (B) the name and address of the patent owner or
12        owners and assignee or assignees, if any; or
13            (C) factual allegations concerning the specific
14        areas in which the target's products, services, or
15        technology infringed the patent or are covered by the
16        claims in the patent;
17        (2) the demand letter does not contain the information
18    described in item (1), the target requested the
19    information, and the person did not provide the information
20    within a reasonable period of time;
21        (3) prior to sending the demand letter, the person
22    failed to conduct an analysis comparing the claims in the
23    patent to the target's products, services, or technology or
24    an analysis was done but does not identify specific areas
25    in which the products, services, or technology are covered
26    by the claims in the patent;

 

 

SB2887- 3 -LRB099 19263 JLS 43655 b

1        (4) the demand letter includes a demand for payment of
2    a license fee or a response within an unreasonably short
3    period of time;
4        (5) the person offered to license the patent for an
5    amount that is not based on a reasonable estimate of the
6    value of the license;
7        (6) the person knew or should have known that the
8    assertion of patent infringement is meritless;
9        (7) the assertion of patent infringement is deceptive;
10    and
11        (8) the person or a subsidiary or affiliate of the
12    person previously filed or threatened to file a lawsuit
13    based on the same or similar claim of patent infringement
14    and:
15            (A) those threats or lawsuits lacked the
16        information described in item (1); or
17            (B) the person attempted to enforce the claim of
18        patent infringement in litigation and a court found the
19        claim to be meritless.
20    (e) The court may consider the following factors as
21evidence that the person did not make a bad faith assertion of
22patent infringement:
23        (1) the demand letter contains the information
24    described in item (1) of subsection (d);
25        (2) the demand letter does not contain the information
26    described in item (1) of subsection (d), the target

 

 

SB2887- 4 -LRB099 19263 JLS 43655 b

1    requested the information, and the person provided the
2    information within a reasonable period of time;
3        (3) the person engaged in a good faith effort to
4    establish that the target infringed the patent and to
5    negotiate an appropriate remedy;
6        (4) the person made a substantial investment in the use
7    of the patent or in the production or sale of a product or
8    item covered by the patent;
9        (5) the person is:
10            (A) the inventor or joint inventor of the patent
11        or, in the case of a patent filed by and awarded to an
12        assignee of the original inventor or joint inventor, is
13        the original assignee; or
14            (B) an institution of higher education or a
15        technology transfer organization whose primary purpose
16        is to facilitate the commercialization of technologies
17        developed by an institution of higher education that is
18        owned by or affiliated with an institution of higher
19        education; and
20        (6) the person demonstrated good faith business
21    practices in previous efforts to enforce the patent or a
22    substantially similar patent or successfully enforced the
23    patent or a substantially similar patent through
24    litigation.
25    (f) The court may award the following remedies to a target
26who prevails in an action brought pursuant to this Section:

 

 

SB2887- 5 -LRB099 19263 JLS 43655 b

1        (1) equitable relief;
2        (2) damages;
3        (3) costs and fees, including reasonable attorney's
4    fees; and
5        (4) punitive damages in an amount equal to $50,000 or 3
6    times the total damages, costs, and fees, whichever is
7    greater.
8    (g) The Attorney General may bring an action to enjoin a
9violation of this Section. A violation of this Section
10constitutes an unlawful practice within the meaning of this
11Act.
12    (h) When a target reasonably believes a person made a bad
13faith assertion of patent infringement against the target, the
14target may file a motion with the circuit court to require the
15person to post a bond. If the circuit court finds the target
16has established a reasonable likelihood that the person made a
17bad faith assertion of patent infringement, the circuit court
18shall require the person to post a bond in an amount equal to a
19good faith estimate of the target's costs to litigate the claim
20and amounts reasonably likely to be recovered under subsection
21(f). The circuit court shall hold a hearing if requested by
22either party. A bond ordered pursuant to this subsection may
23not exceed $250,000. The circuit court may waive the bond
24requirement if it finds the person has available assets equal
25to the amount of the proposed bond or for other good cause
26shown.

 

 

SB2887- 6 -LRB099 19263 JLS 43655 b

1    (i) This Section does not apply to a demand letter or
2assertion of patent infringement that includes a claim for
3relief arising under 35 United States Code, Section 271(e)(2)
4or 42 United States Code, Section 262.
5    "Affiliated person" means a person affiliated with the
6intended recipient of a written or electronic communication.
7    "Intended recipient" means a person who purchases, rents,
8leases, or otherwise obtains a product or service in the
9commercial market that is not for resale in the commercial
10market and that is, or later becomes, the subject of a patent
11infringement allegation.
12    (b) It is an unlawful practice under this Act for a person,
13in connection with the assertion of a United States patent, to
14send or cause any person to send any written, including
15electronic, communication that states that the intended
16recipient or any affiliated person is infringing or has
17infringed a patent and bears liability or owes compensation to
18another person, if:
19        (1) the communication falsely threatens that
20    administrative or judicial relief will be sought if
21    compensation is not paid or the infringement issue is not
22    otherwise resolved;
23        (2) the communication falsely states that litigation
24    has been filed against the intended recipient or any
25    affiliated person;
26        (3) the assertions contained in the communication lack

 

 

SB2887- 7 -LRB099 19263 JLS 43655 b

1    a reasonable basis in fact or law because:
2            (A) the person asserting the patent is not a
3        person, or does not represent a person, with the
4        current right to license the patent to or enforce the
5        patent against the intended recipient or any
6        affiliated person;
7            (B) the communication seeks compensation for a
8        patent that has been held to be invalid or
9        unenforceable in a final, unappealable or unappealed,
10        judicial or administrative decision; or
11            (C) the communication seeks compensation on
12        account of activities undertaken after the patent has
13        expired; or
14        (4) the content of the communication fails to include
15    information necessary to inform an intended recipient or
16    any affiliated person about the patent assertion by failing
17    to include the following:
18            (A) the identity of the person asserting a right to
19        license the patent to or enforce the patent against the
20        intended recipient or any affiliated person;
21            (B) the patent issued by the United States Patent
22        and Trademark Office alleged to have been infringed;
23        and
24            (C) the factual allegations concerning the
25        specific areas in which the intended recipient's or
26        affiliated person's products, services, or technology

 

 

SB2887- 8 -LRB099 19263 JLS 43655 b

1        infringed the patent or are covered by the claims in
2        the patent.
3    (c) Nothing in this Section shall be construed to deem it
4an unlawful practice for any person who owns or has the right
5to license or enforce a patent to:
6        (1) advise others of that ownership or right of license
7    or enforcement;
8        (2) communicate to others that the patent is available
9    for license or sale;
10        (3) notify another of the infringement of the patent;
11    or
12        (4) seek compensation on account of past or present
13    infringement or for a license to the patent.
14(Source: P.A. 98-1119, eff. 1-1-15; 99-78, eff. 7-20-15.)