Texas 2015 - 84th Regular

Texas Senate Bill SB1187 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	84R8773 DDT-D
2	2	By: Taylor of Collin S.B. No. 1187
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to claims of patent infringement; providing civil
8	8	penalties; imposing fees.
9	9	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	10	SECTION 1. The heading to Title 99, Business & Commerce
11	11	Code, is amended to read as follows:
12	12	TITLE 99. MISCELLANEOUS [COMMERCIAL] PROVISIONS
13	13	SECTION 2. Title 99, Business & Commerce Code, is amended by
14	14	adding Chapter 2005 to read as follows:
15	15	CHAPTER 2005. CLAIMS OF PATENT INFRINGEMENT
16	16	SUBCHAPTER A. GENERAL PROVISIONS
17	17	Sec. 2005.001. DEFINITIONS. In this chapter:
18	18	(1) "Affiliate" means an entity that, directly or
19	19	indirectly, owns or controls, is owned or controlled by, or is under
20	20	common ownership or control with a registrant under Section
21	21	2005.101.
22	22	(2) "Control" means to exercise substantial influence
23	23	over the policies and actions of another.
24	24	(3) "Demand letter" means a letter, e-mail, or other
25	25	written communication, including a series of written
26	26	communications, that is sent to a target, a target's attorney or
27	27	other representative, or a target's customers and that claims that
28	28	the target has engaged in patent infringement.
29	29	(4) "Target" means a Texas resident:
30	30	(A) who has received a demand letter or against
31	31	whom an allegation of patent infringement has been made;
32	32	(B) who has been threatened with litigation or
33	33	against whom a lawsuit has been filed alleging patent infringement;
34	34	(C) whose attorney or other representative has
35	35	received a demand letter claiming that the person's product,
36	36	service, or technology has infringed a patent; or
37	37	(D) whose customers have received a demand letter
38	38	claiming that the person's product, service, or technology has
39	39	infringed a patent.
40	40	(5) "Texas resident" means a person who resides in
41	41	this state or is doing business in this state.
42	42	SUBCHAPTER B. BAD FAITH CLAIMS OF PATENT INFRINGEMENT
43	43	Sec. 2005.051. BAD FAITH CLAIMS OF PATENT INFRINGEMENT
44	44	PROHIBITED. (a) A person may not send a demand letter making, in
45	45	bad faith, a claim of patent infringement against a Texas resident,
46	46	and in connection with the claim:
47	47	(1) file a lawsuit alleging patent infringement;
48	48	(2) threaten to file a lawsuit if the alleged patent
49	49	infringement is not resolved; or
50	50	(3) make a demand for compensation or damages or
51	51	payment of a license fee based on the alleged patent infringement.
52	52	(b) For purposes of Subsection (a), a person makes a claim
53	53	of patent infringement in bad faith if:
54	54	(1) the claim is objectively baseless, meaning that no
55	55	reasonable litigant could reasonably expect success on the merits;
56	56	and
57	57	(2) the person making the claim knows or should have
58	58	known that the claim is objectively baseless.
59	59	(c) A claim of patent infringement is presumed to have been
60	60	made in good faith if the claim:
61	61	(1) is made by a person who holds a certificate of
62	62	authority issued under Section 2005.151; or
63	63	(2) is a claim for relief arising under 35 U.S.C.
64	64	Section 271(e)(2) or 42 U.S.C. Section 262.
65	65	(d) This section does not apply to a communication between
66	66	parties to the same federal lawsuit.
67	67	Sec. 2005.052. ENFORCEMENT BY ATTORNEY GENERAL; INJUNCTION
68	68	AND CIVIL PENALTY. (a) If the attorney general believes that a
69	69	person has violated Section 2005.051, the attorney general may
70	70	bring an action on behalf of the state to enjoin the person from any
71	71	conduct constituting a continuing violation of that section with
72	72	respect to a demand letter already sent or future conduct that would
73	73	violate that section.
74	74	(b) In addition to seeking an injunction under Subsection
75	75	(a), the attorney general may request and the court may order any
76	76	other relief that may be in the public interest, including:
77	77	(1) the imposition of a civil penalty in an amount not
78	78	to exceed $50,000 for each violation of Section 2005.051, except as
79	79	provided by Subsection (c);
80	80	(2) an order requiring reimbursement to this state for
81	81	the reasonable value of investigating and prosecuting a violation
82	82	of Section 2005.051; and
83	83	(3) an order requiring reimbursement of a target for
84	84	legal, professional, and technical expenses related to evaluating
85	85	or preparing to defend against the claim.
86	86	(c) If the trier of fact finds that the person described by
87	87	Subsection (a) falsely claimed to a target or a target's attorney or
88	88	other representative that the person received a certificate of
89	89	authority under Section 2005.151, the court may increase the amount
90	90	of the civil penalty to an amount not to exceed $150,000 for each
91	91	violation of Section 2005.051.
92	92	(d) If the amount of money recovered after final judgment is
93	93	insufficient to satisfy the civil penalty, the state's
94	94	investigation and prosecution costs, and the target's or targets'
95	95	evaluation and preparation costs, the money must be paid toward
96	96	each on a pro rata basis.
97	97	Sec. 2005.053. COMPLAINTS. (a) A target or a target's
98	98	attorney or other representative who receives a demand letter from
99	99	a person located anywhere in the United States and who believes that
100	100	the person violated Section 2005.051 in connection with the letter
101	101	may file a written complaint with the attorney general.
102	102	(b) A target whose customers receive a demand letter from a
103	103	person located anywhere in the United States may also file a
104	104	complaint with the attorney general if the target believes that the
105	105	sender of the demand letter violated Section 2005.051 in connection
106	106	with the letter.
107	107	(c) A complaint filed with the attorney general under this
108	108	section must include a copy of the demand letter.
109	109	Sec. 2005.054. NO PRIVATE CAUSE OF ACTION. This subchapter
110	110	does not create a private cause of action for a violation of Section
111	111	2005.051.
112	112	Sec. 2005.055. CONSTRUCTION OF SUBCHAPTER; EFFECT ON
113	113	ATTORNEY GENERAL AUTHORITY. This subchapter may not be construed
114	114	to limit rights and remedies available to the state or to any person
115	115	under any other law and may not alter or restrict the attorney
116	116	general's authority under law with regard to conduct involving
117	117	assertions of patent infringement.
118	118	SUBCHAPTER C. REGISTRATION AND DISCLOSURE REQUIREMENTS; DATABASES
119	119	Sec. 2005.101. REGISTRATION AND DISCLOSURE REQUIREMENT FOR
120	120	CERTAIN PATENT INFRINGEMENT CLAIMS; DATABASE. (a) A person who
121	121	sends 10 or more demand letters per calendar year from anywhere in
122	122	the United States and who has an ownership interest in a patent
123	123	associated with the demand letters or a person on whose behalf the
124	124	letters are sent from anywhere in the United States and who has an
125	125	ownership interest in a patent associated with the demand letters
126	126	shall, not later than the 30th day after the date the 10th demand
127	127	letter is sent:
128	128	(1) register with the secretary of state;
129	129	(2) provide the information required under Subsection
130	130	(b); and
131	131	(3) pay a registration fee in the amount established
132	132	under Section 2005.104.
133	133	(b) The secretary of state shall establish and maintain a
134	134	database of persons required to register under Subsection (a). The
135	135	database must include:
136	136	(1) a summary of information from each demand letter
137	137	sent to a Texas resident by or on behalf of the registrant during
138	138	the two-year period preceding the date the 10th demand letter was
139	139	sent, including the name of the sender, the date of the letter, the
140	140	person to whom the letter was sent, the patent number associated
141	141	with the letter, and any other information the secretary of state
142	142	considers relevant;
143	143	(2) in the case of a registrant who is a business
144	144	entity:
145	145	(A) the names and addresses of the registrant's
146	146	top five executive officers, if applicable;
147	147	(B) the name and address of each individual who
148	148	has an ownership interest in the registrant of more than five
149	149	percent; and
150	150	(C) the name and address of each affiliate of the
151	151	registrant; and
152	152	(3) the name and address of each person who has made an
153	153	investment in or a loan to the registrant in an amount of $1 million
154	154	or more during the 12-month period preceding the date the 10th
155	155	demand letter was sent by or on behalf of the registrant.
156	156	(c) This section does not apply to:
157	157	(1) a demand letter sent by or on behalf of a person
158	158	who holds a certificate of authority issued under Section 2005.151;
159	159	or
160	160	(2) a demand letter that includes a claim for relief
161	161	arising under 35 U.S.C. Section 271(e)(2) or 42 U.S.C. Section 262.
162	162	Sec. 2005.102. DEMAND LETTER DATABASE; NOTIFICATION. (a) A
163	163	target or a target's attorney or other representative who receives
164	164	a demand letter sent from anywhere in the United States may notify
165	165	the secretary of state of the person's receipt of the demand letter
166	166	and provide the secretary of state with a copy of the letter and, if
167	167	not contained in the letter:
168	168	(1) the target's name and address;
169	169	(2) the name and address of the person who claims to
170	170	own or claims to have a right to license the patent that the letter
171	171	claims the target has infringed; and
172	172	(3) the patent number of each patent that the person
173	173	sending the demand letter claims the target has infringed.
174	174	(b) The secretary of state shall establish and maintain a
175	175	database of demand letters and other information about which the
176	176	secretary of state has received notification under Subsection (a).
177	177	The database must include:
178	178	(1) the names and addresses of the persons described
179	179	by Subsection (a)(2) and targets against whom an allegation of
180	180	patent infringement has been made; and
181	181	(2) the patent number of each patent that the targets
182	182	have allegedly infringed.
183	183	(c) The secretary of state shall notify the sender of a
184	184	demand letter of the registration requirements of Section 2005.101
185	185	if the secretary of state has reason to believe the sender or other
186	186	person on whose behalf the letter was sent is required to but has
187	187	failed to register under that section. The secretary of state must
188	188	send the notification at least 30 days before the date the attorney
189	189	general brings an action under Section 2005.105.
190	190	Sec. 2005.103. LIMITED ACCESS TO DATABASES;
191	191	CONFIDENTIALITY. (a) Except as provided by Subsection (b) or (c),
192	192	information contained in the databases established under Sections
193	193	2005.101 and 2005.102 is confidential and not subject to disclosure
194	194	under Chapter 552, Government Code.
195	195	(b) The secretary of state shall establish a procedure to
196	196	allow only the following persons to have online access to
197	197	information contained in the databases established under Sections
198	198	2005.101 and 2005.102:
199	199	(1) a target or a target's attorney or other
200	200	representative who provides a demand letter under Section 2005.102
201	201	that includes a patent number and evidence of a demand for
202	202	compensation or damages or payment of a license fee based on the
203	203	alleged patent infringement; and
204	204	(2) a person who holds a certificate of authority
205	205	under Section 2005.151.
206	206	(c) Information in the databases may be disclosed to a court
207	207	or to the attorney general to take enforcement action with respect
208	208	to a violation of Section 2005.051 or 2005.101.
209	209	Sec. 2005.104. FEES. To cover the costs of administering
210	210	this subchapter, the secretary of state by rule shall establish:
211	211	(1) a registration fee to be paid by persons required
212	212	to register under Section 2005.101; and
213	213	(2) a database access fee to be charged to a person
214	214	permitted by Section 2005.103(b) to access the databases
215	215	established under Sections 2005.101 and 2005.102.
216	216	Sec. 2005.105. CIVIL PENALTY. (a) Except as provided by
217	217	Subsection (b), a person who violates Section 2005.101(a) and does
218	218	not come into compliance with that section on or before the 30th day
219	219	after the date the secretary of state sends notice of the
220	220	registration requirements of that section as required by Section
221	221	2005.102(c) is liable to the state for a civil penalty in an amount
222	222	not to exceed $10,000 for each day the violation continues.
223	223	(b) If the trier of fact finds that the person described by
224	224	Subsection (a) falsely claimed to a target or a target's attorney or
225	225	other representative that the person received a certificate of
226	226	authority under Section 2005.151, the court may increase the amount
227	227	of the civil penalty to an amount not to exceed $30,000 for each day
228	228	the violation of Section 2005.101(a) continues.
229	229	(c) The attorney general may bring suit to recover the civil
230	230	penalty imposed under this section. For purposes of the notice
231	231	requirement under Section 2005.102(c), the attorney general shall
232	232	notify the secretary of state before bringing a suit under this
233	233	section and allow time for that notice to be timely made.
234	234	(d) The attorney general may recover reasonable expenses
235	235	incurred in recovering the civil penalty, including court costs and
236	236	reasonable attorney's fees.
237	237	Sec. 2005.106. RULES. The secretary of state may establish
238	238	procedures and shall adopt rules to implement this subchapter.
239	239	SUBCHAPTER D. CERTIFICATE OF AUTHORITY
240	240	Sec. 2005.151. CERTIFICATE OF AUTHORITY FOR CERTAIN
241	241	BUSINESSES. (a) A person may apply to the attorney general for a
242	242	certificate of authority for purposes of establishing a presumption
243	243	under Section 2005.051(c)(1) or asserting an exemption under
244	244	Section 2005.101(c)(1).
245	245	(b) Subject to Subsection (c), the attorney general by rule
246	246	shall adopt eligibility criteria for the issuance by the attorney
247	247	general of a certificate of authority under this section.
248	248	(c) The attorney general shall issue a certificate of
249	249	authority to an applicant who:
250	250	(1) owns at least 1,000 patents;
251	251	(2) generates $5 billion or more in annual sales; and
252	252	(3) employs at least 5,000 persons.
253	253	(d) The attorney general by rule shall establish a procedure
254	254	by which a person may apply for and receive a certificate of
255	255	authority under this section.
256	256	(e) The attorney general may charge an application fee to
257	257	recover the costs of administering this section.
258	258	(f) A person denied a certificate of authority under this
259	259	section may appeal that determination to a district court.
260	260	SECTION 3. (a) Not later than January 1, 2016, the secretary
261	261	of state shall establish the databases required by Sections
262	262	2005.101 and 2005.102, Business & Commerce Code, as added by this
263	263	Act.
264	264	(b) Not later than January 1, 2016, the secretary of state
265	265	shall adopt the rules necessary to implement Subchapter C, Chapter
266	266	2005, Business & Commerce Code, as added by this Act.
267	267	(c) Notwithstanding Section 2005.101, Business & Commerce
268	268	Code, as added by this Act, a person is not required to register
269	269	under that section before January 1, 2016.
270	270	SECTION 4. Not later than October 1, 2015, the attorney
271	271	general shall adopt the rules necessary to implement Section
272	272	2005.151, Business & Commerce Code, as added by this Act.
273	273	SECTION 5. This Act takes effect September 1, 2015.