WASHINGTON – Exactly one week after the Senate Judiciary Committee passed its patent reform bill, the PATENT Act (S. 1137), the House Judiciary Committee marked up and favorably reported H.R. 9: the Innovation Act. By making important reforms to the nation’s patent litigation system, the Innovation Act would address abusive practices by patent trolls that bully American businesses, including many convenience stores, with deceptive and often illegitimate claims of patent infringement.

Authored by Judiciary Chairman Bob Goodlatte (R-VA), the bipartisan legislation was reported out of the Committee by a bipartisan vote of 24 to 8. H.R. 9 contains several valuable reform provisions that will be particularly helpful to NACS members, who are usually technology product (e.g. Wi-Fi or card processing technology) “end users” and specifically targeted by patent trolls. For example, the legislation contains a “customer stay” provision that would allow the manufacturer of a product to litigate alleged patent infringement rather than the product’s end-user.

Committee members considered 20 amendments during the markup, including several that were ultimately integrated into the legislation adopted by the Committee. The Committee adopted a manager’s amendment – a term for an amended version of a bill offered by the member managing debate on that bill – that contained several technical and substantive changes to the bill there were proposed to address members’ concerns and facilitate passage of the legislation.

The Committee also accepted several amendments that will significantly strengthen the legislation. Members voted in favor of a venue reform amendment offered by Chairman Goodlatte and Representatives Jerry Nadler (D-NY), Darrell Issa (R-CA), Blake Farenthold (R-TX), Zoe Lofgren (D-CA), Suzan DelBene (D-WA), Judy Chu (D-CA), Randy Forbes (R-VA), and Mimi Walters (R-CA), which would limit where a patent troll could file a patent infringement case.  This venue provision is critical to effective patent reform, since the majority of patent trolls intentionally file frivolous infringement cases in specific courts – such as the Eastern District of Texas – where the court is known to be “friendly” to plaintiff’s lawyers.

The committee also accepted an amendment, offered by Representative Doug Collins (R-GA), related to the legislation’s “discovery” provisions. Patent trolls frequently use discovery – a court supervised process when the parties gather relevant information from each other – to drive up litigation costs, forcing a resource-poor defendant to seek negotiated settlements as a way to avoid insurmountable legal fees. The Collins amendment would prevent or limit these expensive proceedings in instances when a defendant has filed a motion to dismiss or transfer the lawsuit, protecting troll victims from unnecessary discovery expenses.

Several amendments, including seven that would have weakened the overall legislation by exempting certain entities from various provisions in the bill, were offered and ultimately withdrawn or defeated.  Two of those amendments – one offered by Representative Ted Deutch (D-FL) and the other offered by Representative Scott Peters (D-CA) – would have been particularly harmful to retailers as they would have weakened the customer stay provisions in the bill. Both the defeat of those amendments and the strong final vote showed that policymakers have listened to NACS and other patent reform advocates and are committed to protecting retailers and other American businesses from abusive patent troll tactics.

Many, including NACS, are still concerned that the bill’s pleadings provisions– the provisions that would require a plaintiff to identify each claim that is allegedly infringed (and would thus make the patent litigation process more transparent for accused infringers) – are too weak.  However, Chairman Goodlatte has promised to work with Members on those provisions before the bill moves to the House floor. An executive committee member of the United for Patent Reform Coalition, NACS will continue to actively advocate for patent reform and will work closely with Committee members to strengthen the pleadings and other provisions in the bill.

Despite the momentum behind patent reform, it remains uncertain when the full House and Senate will vote on their respective patent reform bills. Last Congress, a similar version of the Innovation Act passed the House of Representatives by a vote of 325 to 91 while patent reform stalled in Senate after then-Majority Leader Harry Reid (D-NV) stated he would not bring any patent reform bill to the floor given opposition from trial lawyers.