Transparency in Assertion of Patents Act

Summary: Transparency in Assertion of Patents Act - Directs the Federal Trade Commission (FTC) to promulgate rules prohibiting unfair or deceptive acts and practices in the sending of written communications (commonly referred to as &quot;demand letters&quot;) stating that the intended recipient, or any person affiliated with the intended recipient: (1) is infringing, or may be infringing, the patent of another; and (2) bears liability or owes compensation. Requires such rules to establish disclosures that such written communications must contain, including:   each claim of each patent allegedly infringed;  each product, device, business method, service, or technology that allegedly infringes each claim; a notice that the intended recipient may have the right to have the product manufacturer defend against the infringement;   contact information necessary to determine the identity of a person with the right to enforce the patent or with a direct financial interest in the patent, including each owner, co-owner, assignee, exclusive licensee, and entity with the authority to enforce the patent, as well as the ultimate parent entity with such authority;   any licensing commitment or obligation (such as reasonable and non-discriminatory terms) that applies to the patent or claim; the method used to calculate any proposed compensation; and each current instance of reexamination or other post-grant review of the patent at the U.S. Patent and Trademark Office (USPTO), any litigation involving the patent, and the status of such review and any determinations as to the invalidity of the patent or any of its claims.  Directs the FTC to: (1) prohibit unfair or deceptive assertions in such written communications, and (2) provide education and awareness to the public regarding deceptive communications. Sets forth the enforcement authority of the FTC and authorizes civil actions by states. Establishes civil penalties applicable to state actions. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Transparency in Assertion of Patents 
Act''.

SEC. 2. TRANSPARENCY IN ASSERTION OF PATENTS.

    (a) Disclosures.--The Federal Trade Commission (referred to in this 
Act as the ``Commission'') shall promulgate rules to prohibit unfair or 
deceptive acts and practices in the sending of written communication 
that states that the intended recipient of the written communication, 
or any person affiliated with the intended recipient, is infringing or 
may be infringing the patent of and bears liability or owes 
compensation to another. Such rules shall establish the disclosures 
that a written communication to which this subsection applies must 
contain, including--
            (1) a detailed description of--
                    (A) each patent allegedly infringed, including the 
                patent number; and
                    (B) each claim of each patent that is allegedly 
                infringed;
            (2) a clear, accurate, and detailed description, such as 
        the manufacturer and model number, of each product, device, 
        business method, service, or technology that allegedly 
        infringes each claim under paragraph (1)(B) or that is covered 
        by that claim;
            (3) a clear, accurate, and detailed description of how a 
        product, device, business method, service, or technology under 
        paragraph (2) allegedly infringes a patent or claim under 
        paragraph (1);
            (4) notice to the intended recipient that the intended 
        recipient may have the right to have the manufacturer under 
        paragraph (2) defend against the alleged infringement;
            (5) a name, an address, and any other contact information 
        necessary for an intended recipient to determine the identity 
        of a person with the right to enforce a patent described under 
        paragraph (1) or with a direct financial interest in a patent 
        described under paragraph (1), including each owner, co-owner, 
        assignee, exclusive licensee, and entity with the authority to 
        enforce the patent, and the ultimate parent entity (as defined 
        in section 801.1(a)(3) of title 16, Code of Federal 
        Regulations, or any successor regulation) of each owner, co-
        owner, assignee, exclusive licensee, and entity with the 
        authority to enforce the patent;
            (6) a description of any licensing commitment or 
        obligation, such as reasonable and non-discriminatory terms, 
        that applies to a patent or claim under paragraph (1);
            (7) if compensation is proposed, the method used to 
        calculate that proposed amount;
            (8) each current instance of reexamination or other post-
        grant review of each patent described under paragraph (1) at 
        the Patent and Trademark Office, any past or ongoing litigation 
        involving the patent, and the status of such review and any 
        determinations as to the invalidity of the patent or any of its 
        claims; and
            (9) other disclosures that the Commission considers 
        necessary to carry out the purpose of this Act.
    (b) Exemptions.--The rules promulgated by the Commission under 
subsection (a) may exempt from any requirement of that subsection 
written communication between parties regarding existing licensing 
agreements, and any other written communication, that the Commission 
determines is not necessary for the protection of consumers or within 
the scope of the purposes of this Act.
    (c) Unfair or Deceptive Assertions.--The Commission shall 
promulgate rules to prohibit unfair or deceptive assertions in written 
communication to which subsection (a) applies. Such rules shall specify 
the actions that constitute an unfair or deceptive assertion, 
including--
            (1) an assertion that falsely threatens administrative or 
        judicial relief will be sought if compensation is not paid or 
        the infringement is not otherwise resolved;
            (2) an assertion that lacks a reasonable basis in fact or 
        law; and
            (3) an assertion that is likely to materially mislead a 
        reasonable intended recipient.
    (d) Consumer Education.--The Commission shall provide education and 
awareness to the public regarding unfair or deceptive patent 
assertions.
    (e) Rulemaking.--The Commission shall promulgate the rules under 
this Act in accordance with section 553 of title 5, United States Code.
    (f) Enforcement by the Commission.--A violation of a rule 
promulgated under this Act shall be treated as a violation of a rule 
defining an unfair or deceptive act or practice under section 
18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 
57a(a)(1)(B)). The Commission shall enforce this Act in the same 
manner, by the same means, and with the same jurisdiction, powers, and 
duties as though all applicable terms and provisions of the Federal 
Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and 
made a part of this Act. Any person who violates this Act shall be 
subject to the penalties and entitled to the privileges and immunities 
provided in the Federal Trade Commission Act (15 U.S.C. 41 et seq.).
    (g) Enforcement by State Attorneys General.--
            (1) Civil action.--In any case in which the attorney 
        general of a State, or an official or agency of a State, has 
        reason to believe that an interest of the residents of that 
        State has been or is threatened or adversely affected by 
        engagement of any person subject to a rule promulgated under 
        this Act in a practice that violates the rule, the attorney 
        general, official, or agency of the State, as parens patriae, 
        may bring a civil action on behalf of the residents of the 
        State in an appropriate district court of the United States--
                    (A) to enjoin further violation of the rule by the 
                defendant;
                    (B) to compel compliance with the rule;
                    (C) to obtain damages, restitution, or other 
                compensation on behalf of such residents;
                    (D) to obtain such further and other relief as the 
                court considers appropriate; or
                    (E) to obtain civil penalties in the amount 
                determined under paragraph (2).
            (2) Civil penalties.--
                    (A) Calculation.--For purposes of imposing a civil 
                penalty under paragraph (1)(E), the amount determined 
                under this paragraph is the amount calculated by 
                multiplying the number of separate violations of a rule 
                by an amount not greater than $16,000.
                    (B) Adjustment for inflation.--Beginning on the 
                date that the Consumer Price Index is first published 
                by the Bureau of Labor Statistics that is after 1 year 
                after the date of enactment of this Act, and each year 
                thereafter, the amount specified in subparagraph (A) 
                shall be increased by the percentage increase in the 
                Consumer Price Index published on that date from the 
                Consumer Price Index published the previous year.
            (3) Intervention by the commission.--
                    (A) Notice and intervention.--The State shall 
                provide prior written notice of any civil action under 
                paragraph (1) to the Commission and provide the 
                Commission with a copy of its complaint, except in any 
                case in which such prior notice is not feasible, in 
                which case the State shall serve such notice 
                immediately upon commencing such action. The Commission 
                shall have the right--
                            (i) to intervene in the civil action;
                            (ii) upon so intervening, to be heard on 
                        all matters arising in the civil action; and
                            (iii) to file petitions for appeal of a 
                        decision in the civil action.
                    (B) Limitation on state action while federal action 
                is pending.--If the Commission has instituted a civil 
                action for violation of this Act, no State attorney 
                general, or official or agency of a State, may bring an 
                action under this subsection during the pendency of 
                that action against any defendant named in the 
                complaint of the Commission for any violation of this 
                Act alleged in the complaint.
            (4) Construction.--For purposes of bringing any civil 
        action under paragraph (1), nothing in this Act shall be 
        construed to prevent an attorney general of a State from 
        exercising the powers conferred on the attorney general by the 
        laws of that State to conduct investigations, to administer 
        oaths or affirmations, or to compel the attendance of witnesses 
        or the production of documentary and other evidence.
    (h) Rule of Construction.--Nothing in this Act shall be construed 
as limiting or otherwise affecting in any way--
            (1) any other authority of the Commission; or
            (2) the application of title 35, United States Code, or any 
        other provision of law relating to patents.