PALS Act

II 116TH CONGRESS 1ST SESSION S. 2178 To impose requirements in certain actions for patent infringement, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 18, 2019 Mr. RUBIO (for himself and Mr. CORNYN) introduced the following bill; which was read twice and referred to the Committee on the Judiciary A BILL To impose requirements in certain actions for patent infringement, and for other purposes. 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 ‘‘Prevent Abuse of the 4 Legal System Act’’ or the ‘‘PALS Act’’. 5 SEC. 2. COVERED INFRINGEMENT ACTIONS. 6 (a) DEFINITIONS.—In this section— 7 (1) the term ‘‘affected proceeding’’ means an 8 action for infringement of a patent under title 35, 9 United States Code, an investigation under section 10 VerDate Sep 11 2014 22:28 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2178.IS S2178 kjohnson on DSK79L0C42 with BILLS 2 •S 2178 IS 337 of the Tariff Act of 1930 (19 U.S.C. 1337), or 1 any other administrative or judicial proceeding in 2 which— 3 (A) a patent issued by the United States 4 Patent and Trademark Office is a subject of 5 the proceeding; and 6 (B) a designated entity— 7 (i) is the owner or exclusive licensee of 8 the patent described in subparagraph (A); 9 (ii) has a financial interest in the out- 10 come of the proceeding; or 11 (iii) has direct or indirect control over 12 the conduct of the litigation of the matter 13 by the holder of the patent described in 14 subparagraph (A); 15 (2) the term ‘‘covered regulations’’ means the 16 Export Administration Regulations under sub- 17 chapter C of chapter VII of title 15, Code of Federal 18 Regulations; and 19 (3) the term ‘‘designated entity’’ means— 20 (A) an entity on the entity list maintained 21 by the Bureau of Industry and Security of the 22 Department of Commerce and set forth in Sup- 23 plement No. 4 to part 744 of title 15, Code of 24 Federal Regulations; or 25 VerDate Sep 11 2014 22:28 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2178.IS S2178 kjohnson on DSK79L0C42 with BILLS 3 •S 2178 IS (B) any parent, subsidiary, or affiliate of 1 an entity described in subparagraph (A). 2 (b) CONDUCT OF AFFECTED PROCEEDINGS.—Not- 3 withstanding any other provision of law or regulation, the 4 following requirements shall apply with respect to an af- 5 fected proceeding: 6 (1) The pleadings alleging infringement of the 7 patent shall, with respect to each patent in which a 8 designated entity has an interest— 9 (A) state with particularity the facts and 10 circumstances constituting that infringement, 11 including— 12 (i) all patent claims alleged to be in- 13 fringed; and 14 (ii) all products and services alleged 15 to be infringed; 16 (B) provide a detailed identification of the 17 specific elements of each patent claim that is 18 found in each product and service identified 19 under subparagraph (A)(ii); and 20 (C) state with particularity all damages or 21 other remedies sought in the proceeding. 22 (2) Excluding legal counsel for the designated 23 entity involved, neither the designated entity nor the 24 agents or representatives of the designated entity 25 VerDate Sep 11 2014 22:28 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2178.IS S2178 kjohnson on DSK79L0C42 with BILLS 4 •S 2178 IS may obtain through discovery, or by other means, 1 any non-public information of any entity or person 2 related to any technical features or operation of a 3 product or service. 4 (3) Upon the filing of the affected proceeding, 5 the designated entity involved shall provide notice of 6 the proceeding to the Department of Justice and the 7 United States Patent and Trademark Office. 8 (4) The United States shall have the uncondi- 9 tional right to intervene as a party in the proceeding 10 under rule 24(a) of the Federal Rules of Civil Proce- 11 dure. 12 (c) RESTRICTIONS ON CERTAIN PATENT TRANS- 13 ACTIONS.—Notwithstanding any other provision of law or 14 regulation, the following requirements shall apply with re- 15 spect to the sale or exclusive license of a patent issued 16 by the United States Patent and Trademark Office: 17 (1) The sale or license is prohibited if the sale 18 or license is to a designated entity and the entity 19 has not undergone review under section 721 of the 20 Defense Production Act of 1950 (50 U.S.C. 4565). 21 (2) The sale or license is prohibited if the sale 22 or license is to or by a designated entity and the 23 manufacture, sale, use, import, or export of a prod- 24 uct or service that is subject to the covered regula- 25 VerDate Sep 11 2014 22:28 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2178.IS S2178 kjohnson on DSK79L0C42 with BILLS 5 •S 2178 IS tions would infringe the patent, unless an appro- 1 priate license is granted under the covered regula- 2 tions. 3 (3) With respect to a patent not involving a 4 drug or biological product, the sale or license of the 5 patent to or by a designated entity to any foreign 6 entity or affiliate shall require notification pursuant 7 to rules under subsection (d)(1), and the waiting pe- 8 riod described in subsection (b)(1), of section 7A of 9 the Clayton Act (15 U.S.C. 18a), notwithstanding 10 any other provision of that Act. 11 (d) LIST.—The Under Secretary of Commerce for In- 12 tellectual Property and Director of the United States Pat- 13 ent and Trademark Office shall maintain a publicly avail- 14 able list of all designated entities. 15 Æ VerDate Sep 11 2014 22:28 Jul 23, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\S2178.IS S2178 kjohnson on DSK79L0C42 with BILLS