U.S. House of Representatives Approves Innovation Act; Would Make Awards of Attorneys' Fees More Common

At 1:13 p.m. Eastern time, the U.S. House of Representatives approved Congressman Goodlatte's Innovation Act, which is intended to rein in patent trolls.  I've previously blogged on the bill, here.  The text of the bill as reported out of committee is here.  It was approved subject to two amendments that were made during the course of the vote.  These were:

An amendment, offered by Mr. Goodlatte, numbered 1 printed in Part A of House Report 113-283 to makes a few technical and clarifying changes. Specifically, under Section 3(d), it clarifies that the exception in paragraph one applies to biosimilars, it also adds an exception for actions seeking relief based on competitive harm, and ensures that the provision is not subject to reverse gamesmanship. Under Section 6(d) it makes clarifying changes that ensure that foreign courts cannot terminate licenses to US IP. Extends time required by the agencies to complete the various studies and reports required in the bill.  

and 

An amendment, offered by Mr. Rohrabacher, numbered 7 printed in Part A of House Report 113-283 to strike 9(a) from the bill and reorder the remaining subsections of Section 9.

The vote on the bill as amended was 325-91.

Some changes from the version of the bill introduced in October and the version that was reported out of committee and approved by the House are in the section on attorneys' fee awards (section 3(b)(1), which if enacted into law will amend section 285 of the Patent Act).  Most importantly, in the version introduced in October, the relevant language read:

AWARD.—The court shall award, to a prevailing party, reasonable fees and other expenses incurred by that party in connection with a civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, unless the court finds that the position of the nonprevailing party or parties was substantially justified or that special circumstances make an  award unjust. 

The language now reads:

AWARD.—The court shall award, to a prevailing party, reasonable fees and other expenses incurred by that party in connection with a civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, unless the court finds that the position and conduct of the nonprevailing party or parties were reasonably justified in law and fact or that special circumstances (such as severe economic hardship to a named inventor) make an award unjust.

I'm not sure what the difference is between "substantially justified" and "reasonably justified," but if the bill eventually becomes law I guess we'll find out what the latter term means.  Off the top of my head, I would expect that in the typical case the nonprevailing party's position and conduct would be "reasonably justified," so that fee awards will remain the exception, not the rule.  They just won't be as rare as they are at present.  (I therefore disagree with the usually insightful Tony Dutra at BNA's Patent, Trademark and Copyright Journal when he write that this section "would create a 'loser pays' scheme in most cases . . . ."  I suppose you could say it would create a presumption that the loser pays, but I suspect that in the typical case the presumption will not be too difficult to overcome.  But maybe I'll be proven wrong.)

For readers who aren't familiar with the U.S. constitutional system, passage by the House doesn't mean the bill has been enacted into law.  A vote on companion legislation in the Senate has not taken place, and any bill that eventually is jointly approved by both the House and the Senate would still have to be signed by the president to become law (though that seems likely). 

Correction.  As Mr. Dutra notes in his report, there were two other amendments which passed on voice vote.  These were (and as above, I'm quoting from the Office of the Clerk of the U.S. House of Representatives House Floor Activites for December 5, 2013):

An amendment, offered by Mr. Polis, numbered 3 printed in Part A of House Report 113-283 to require claimants to provide additional disclosure information in any pre-suit notification to establish a willful infringement claim.

and 

An amendment, offered by Ms. Jackson Lee, numbered 6 printed in Part A of House Report 113-283 to require the Director to conduct a study regarding the economic impact of the changes in current law resulting from Sections 3, 4, and 5 of the bill on the ability of individuals and small businesses owned by women, veterans, and minorities to assert, secure, and vindicate their constitutionally guaranteed exclusive right to their inventions and discoveries.