Targeting Rogue and Opaque Letters Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 192 To provide that certain bad faith communications in connection with the assertion of a United States patent are unfair or deceptive acts or practices, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 5, 2021 Mr. BURGESS introduced the following bill; which was referred to the Committee on Energy and Commerce A BILL To provide that certain bad faith communications in connec- tion with the assertion of a United States patent are unfair or deceptive acts or practices, and for other pur- poses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Targeting Rogue and 4 Opaque Letters Act of 2021’’. 5 VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 192 IH SEC. 2. UNFAIR OR DECEPTIVE ACTS OR PRACTICES IN 1 CONNECTION WITH THE ASSERTION OF A 2 UNITED STATES PATENT. 3 (a) IN GENERAL.—It shall be an unfair or deceptive 4 act or practice within the meaning of section 5(a)(1) of 5 the Federal Trade Commission Act (15 U.S.C. 45(a)(1)) 6 for a person, in connection with the assertion of a United 7 States patent, to engage in a pattern or practice of send- 8 ing written communications that state or represent that 9 the recipients are or may be infringing, or have or may 10 have infringed, the patent and bear liability or owe com- 11 pensation to another, if— 12 (1) the sender of the communications, in bad 13 faith, states or represents in the communications 14 that— 15 (A) the sender is a person with the right 16 to license or enforce the patent at the time the 17 communications are sent, and the sender is not 18 a person with such a right; 19 (B) a civil action asserting a claim of in- 20 fringement of the patent has been filed against 21 the recipient; 22 (C) a civil action asserting a claim of in- 23 fringement of the patent has been filed against 24 other persons; 25 VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 192 IH (D) legal action for infringement of the 1 patent will be taken against the recipient; 2 (E) the sender is the exclusive licensee of 3 the patent asserted in the communications; 4 (F) persons other than the recipient pur- 5 chased a license for the patent asserted in the 6 communications; 7 (G) persons other than the recipient pur- 8 chased a license, and the sender does not dis- 9 close that such license is unrelated to the al- 10 leged infringement or the patent asserted in the 11 communications; 12 (H) an investigation of the recipient’s al- 13 leged infringement occurred; or 14 (I) the sender or an affiliate of the sender 15 previously filed a civil action asserting a claim 16 of infringement of the patent based on the ac- 17 tivity that is the subject of the written commu- 18 nication when the sender knew such activity 19 was held, in a final determination, not to in- 20 fringe the patent; 21 (2) the sender of the communications, in bad 22 faith, seeks compensation for— 23 (A) a patent claim that has been held to 24 be unenforceable due to inequitable conduct, in- 25 VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 192 IH valid, or otherwise unenforceable against the re- 1 cipient, in a final determination; 2 (B) activities undertaken by the recipient 3 after expiration of the patent asserted in the 4 communications; or 5 (C) activity of the recipient that the sender 6 knew was authorized, with respect to the patent 7 claim or claims that are the subject of the com- 8 munications, by a person with the right to li- 9 cense the patent; or 10 (3) the sender of the communications, in bad 11 faith, fails to include— 12 (A) the identity of the person asserting a 13 right to license the patent to, or enforce the 14 patent against, the recipient, including the iden- 15 tity of any parent entity and the ultimate par- 16 ent entity of such person, unless such person is 17 a public company and the name of the public 18 company is identified; 19 (B) an identification of at least one patent 20 issued by the United States Patent and Trade- 21 mark Office alleged to have been infringed; 22 (C) an identification, to the extent reason- 23 able under the circumstances, of at least one 24 product, service, or other activity of the recipi- 25 VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 192 IH ent that is alleged to infringe the identified pat- 1 ent; 2 (D) a description, to the extent reasonable 3 under the circumstances, of how the product, 4 service, or other activity of the recipient in- 5 fringes an identified patent and patent claim; or 6 (E) a name and contact information for a 7 person the recipient may contact about the as- 8 sertions or claims relating to the patent con- 9 tained in the communications. 10 (b) AFFIRMATIVE DEFENSE.—With respect to sub- 11 section (a), there shall be an affirmative defense that 12 statements, representations, or omissions were not made 13 in bad faith (as defined in subparagraphs (B) and (C) of 14 section 5(1)) if the sender can demonstrate that such 15 statements, representations, or omissions were mistakes 16 made in good faith, which may be demonstrated by a pre- 17 ponderance of evidence that the violation was not inten- 18 tional and resulted from a bona fide error notwithstanding 19 the maintenance of procedures reasonably adapted to 20 avoid any such error. 21 (c) RULE OF CONSTRUCTION.—For purposes of sec- 22 tions 3 and 4, the commission of an act or practice that 23 is declared under this section to be an unfair or deceptive 24 act or practice within the meaning of section 5(a)(1) of 25 VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 192 IH the Federal Trade Commission Act (15 U.S.C. 45(a)(1)) 1 shall be considered to be a violation of this section. 2 SEC. 3. ENFORCEMENT BY FEDERAL TRADE COMMISSION. 3 (a) VIOLATION OF RULE.—A violation of section 2 4 shall be treated as a violation of a rule defining an unfair 5 or deceptive act or practice prescribed under section 6 18(a)(1)(B) of the Federal Trade Commission Act (15 7 U.S.C. 57a(a)(1)(B)). 8 (b) POWERS OF COMMISSION.—The Commission 9 shall enforce this Act in the same manner, by the same 10 means, and with the same jurisdiction, powers, and duties 11 as though all applicable terms and provisions of the Fed- 12 eral Trade Commission Act (15 U.S.C. 41 et seq.) were 13 incorporated into and made a part of this Act. Any person 14 who violates section 2 shall be subject to the penalties and 15 entitled to the privileges and immunities provided in the 16 Federal Trade Commission Act. 17 (c) EFFECT ON OTHER LAWS.—Nothing in this Act 18 shall be construed in any way to limit or affect the author- 19 ity of the Commission under any other provision of law. 20 SEC. 4. PREEMPTION OF STATE LAWS ON PATENT DEMAND 21 LETTERS AND ENFORCEMENT BY STATE AT- 22 TORNEYS GENERAL. 23 (a) PREEMPTION.— 24 VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 192 IH (1) IN GENERAL.—This Act preempts any law, 1 rule, regulation, requirement, standard, or other pro- 2 vision having the force and effect of law of any 3 State, or political subdivision of a State, expressly 4 relating to the transmission or contents of commu- 5 nications relating to the assertion of patent rights. 6 (2) EFFECT ON OTHER STATE LAWS.—Except 7 as provided in paragraph (1), this Act shall not be 8 construed to preempt or limit any provision of any 9 State law, including any State consumer protection 10 law, any State law relating to acts of fraud or decep- 11 tion, and any State trespass, contract, or tort law. 12 (b) ENFORCEMENT BY STATE ATTORNEYS GEN- 13 ERAL.— 14 (1) IN GENERAL.—In any case in which the at- 15 torney general of a State has reason to believe that 16 an interest of the residents of that State has been 17 adversely affected by any person who violates section 18 2, the attorney general of the State, may bring a 19 civil action on behalf of such residents of the State 20 in a district court of the United States of appro- 21 priate jurisdiction— 22 (A) to enjoin further such violation by the 23 defendant; or 24 (B) to obtain civil penalties. 25 VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 192 IH (2) MAXIMUM CIVIL PENALTY.—Notwith- 1 standing the number of actions which may be 2 brought against a person under this subsection, a 3 person may not be liable for a total of more than 4 $5,000,000 for a series of related violations of sec- 5 tion 2. 6 (3) INTERVENTION BY THE FTC.— 7 (A) NOTICE AND INTERVENTION.—The at- 8 torney general of a State shall provide prior 9 written notice of any action under paragraph 10 (1) to the Commission and provide the Commis- 11 sion with a copy of the complaint in the action, 12 except in any case in which such prior notice is 13 not feasible, in which case the attorney general 14 shall serve such notice immediately upon insti- 15 tuting such action. The Commission shall have 16 the right— 17 (i) to intervene in the action; 18 (ii) upon so intervening, to be heard 19 on all matters arising therein; and 20 (iii) to file petitions for appeal. 21 (B) LIMITATION ON STATE ACTION WHILE 22 FEDERAL ACTION IS PENDING.—If the Commis- 23 sion has instituted a civil action for violation of 24 section 2, no State attorney general may bring 25 VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 192 IH an action under this subsection during the 1 pendency of that action against any defendant 2 named in the complaint of the Commission for 3 any violation of such section alleged in the com- 4 plaint. 5 (4) CONSTRUCTION.—For purposes of bringing 6 any civil action under paragraph (1), nothing in this 7 Act shall be construed to prevent the attorney gen- 8 eral of a State from exercising the powers conferred 9 on the attorney general by the laws of that State 10 to— 11 (A) conduct investigations; 12 (B) administer oaths or affirmations; or 13 (C) compel the attendance of witnesses or 14 the production of documentary and other evi- 15 dence. 16 SEC. 5. DEFINITIONS. 17 In this Act: 18 (1) BAD FAITH.—The term ‘‘bad faith’’ means, 19 with respect to section 2(a), that the sender— 20 (A) made knowingly false or knowingly 21 misleading statements, representations, or omis- 22 sions; 23 (B) made statements, representations, or 24 omissions with reckless indifference as to the 25 VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 192 IH false or misleading nature of such statements, 1 representations, or omissions; or 2 (C) made statements, representations, or 3 omissions with awareness of the high prob- 4 ability of the statements, representations, or 5 omissions to deceive and the sender inten- 6 tionally avoided the truth. 7 (2) COMMISSION.—The term ‘‘Commission’’ 8 means the Federal Trade Commission. 9 (3) FINAL DETERMINATION.—The term ‘‘final 10 determination’’ means, with respect to the invalidity 11 or unenforceability of a patent, that the invalidity or 12 unenforceability has been determined by a court of 13 the United States or the United States Patent and 14 Trademark Office in a final decision that is 15 unappealable or for which any opportunity for ap- 16 peal is no longer available. 17 Æ VerDate Sep 11 2014 22:32 Feb 02, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\H192.IH H192 kjohnson on DSK79L0C42PROD with BILLS