Title: Targeting Rogue and Opaque Letters Act of 2018
Policy area: Commerce

Summary:
Targeting Rogue and Opaque Letters Act of 2018
This bill makes sending bad faith patent demand letters an unfair or deceptive act in violation of the Federal Trade Commission Act.
A patent demand letter is a written communication claiming that the recipient may be liable for patent infringement. "Bad faith" means making knowingly false or misleading statements, making claims with reckless disregard for the truth, or omitting information with the intent to deceive.
Bad faith representations under the bill include false or misleading claims about the sender's right to assert the patent, whether lawsuits have been filed against the recipient or others, and whether others have purchased a license to exercise the patent.
It is also bad faith to make written demands for compensation for invalid patents, or to demand compensation without identifying the ultimate parent entity of the letter sender.
The sender has an affirmative defense that it acted in good faith, by proving its misstatements or omissions were unintentional and it made an error in spite of procedures to avoid such errors.
The bill preempts state laws relating to patent assertion communications. The Federal Trade Commission and state attorneys general can bring actions to enforce these provisions.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6370 Introduced in House (IH)]

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115th CONGRESS
  2d Session
                                H. R. 6370

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

                             July 13, 2018

Mr. Burgess (for himself and Ms. Kaptur) introduced the following bill; 
       which was referred to the Committee on Energy and Commerce

_______________________________________________________________________

                                 A BILL


 
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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Targeting Rogue and Opaque Letters 
Act of 2018''.

SEC. 2. UNFAIR OR DECEPTIVE ACTS OR PRACTICES IN CONNECTION WITH THE 
              ASSERTION OF A UNITED STATES PATENT.

    (a) In General.--It shall be an unfair or deceptive act or practice 
within the meaning of section 5(a)(1) of the Federal Trade Commission 
Act (15 U.S.C. 45(a)(1)) for a person, in connection with the assertion 
of a United States patent, to engage in a pattern or practice of 
sending written communications that state or represent that the 
recipients are or may be infringing, or have or may have infringed, the 
patent and bear liability or owe compensation to another, if--
            (1) the sender of the communications, in bad faith, states 
        or represents in the communications that--
                    (A) the sender is a person with the right to 
                license or enforce the patent at the time the 
                communications are sent, and the sender is not a person 
                with such a right;
                    (B) a civil action asserting a claim of 
                infringement of the patent has been filed against the 
                recipient;
                    (C) a civil action asserting a claim of 
                infringement of the patent has been filed against other 
                persons;
                    (D) legal action for infringement of the patent 
                will be taken against the recipient;
                    (E) the sender is the exclusive licensee of the 
                patent asserted in the communications;
                    (F) persons other than the recipient purchased a 
                license for the patent asserted in the communications;
                    (G) persons other than the recipient purchased a 
                license, and the sender does not disclose that such 
                license is unrelated to the alleged infringement or the 
                patent asserted in the communications;
                    (H) an investigation of the recipient's alleged 
                infringement occurred; or
                    (I) the sender or an affiliate of the sender 
                previously filed a civil action asserting a claim of 
                infringement of the patent based on the activity that 
                is the subject of the written communication when the 
                sender knew such activity was held, in a final 
                determination, not to infringe the patent;
            (2) the sender of the communications, in bad faith, seeks 
        compensation for--
                    (A) a patent claim that has been held to be 
                unenforceable due to inequitable conduct, invalid, or 
                otherwise unenforceable against the recipient, in a 
                final determination;
                    (B) activities undertaken by the recipient after 
                expiration of the patent asserted in the 
                communications; or
                    (C) activity of the recipient that the sender knew 
                was authorized, with respect to the patent claim or 
                claims that are the subject of the communications, by a 
                person with the right to license the patent; or
            (3) the sender of the communications, in bad faith, fails 
        to include--
                    (A) the identity of the person asserting a right to 
                license the patent to, or enforce the patent against, 
                the recipient, including the identity of any parent 
                entity and the ultimate parent entity of such person, 
                unless such person is a public company and the name of 
                the public company is identified;
                    (B) an identification of at least one patent issued 
                by the United States Patent and Trademark Office 
                alleged to have been infringed;
                    (C) an identification, to the extent reasonable 
                under the circumstances, of at least one product, 
                service, or other activity of the recipient that is 
                alleged to infringe the identified patent;
                    (D) a description, to the extent reasonable under 
                the circumstances, of how the product, service, or 
                other activity of the recipient infringes an identified 
                patent and patent claim; or
                    (E) a name and contact information for a person the 
                recipient may contact about the assertions or claims 
                relating to the patent contained in the communications.
    (b) Affirmative Defense.--With respect to subsection (a), there 
shall be an affirmative defense that statements, representations, or 
omissions were not made in bad faith (as defined in subparagraphs (B) 
and (C) of section 5(1)) if the sender can demonstrate that such 
statements, representations, or omissions were mistakes made in good 
faith, which may be demonstrated by a preponderance of evidence that 
the violation was not intentional and resulted from a bona fide error 
notwithstanding the maintenance of procedures reasonably adapted to 
avoid any such error.
    (c) Rule of Construction.--For purposes of sections 3 and 4, the 
commission of an act or practice that is declared under this section to 
be an unfair or deceptive act or practice within the meaning of section 
5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1)) shall 
be considered to be a violation of this section.

SEC. 3. ENFORCEMENT BY FEDERAL TRADE COMMISSION.

    (a) Violation of Rule.--A violation of section 2 shall be treated 
as a violation of a rule defining an unfair or deceptive act or 
practice prescribed under section 18(a)(1)(B) of the Federal Trade 
Commission Act (15 U.S.C. 57a(a)(1)(B)).
    (b) Powers of Commission.--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 section 2 
shall be subject to the penalties and entitled to the privileges and 
immunities provided in the Federal Trade Commission Act.
    (c) Effect on Other Laws.--Nothing in this Act shall be construed 
in any way to limit or affect the authority of the Commission under any 
other provision of law.

SEC. 4. PREEMPTION OF STATE LAWS ON PATENT DEMAND LETTERS AND 
              ENFORCEMENT BY STATE ATTORNEYS GENERAL.

    (a) Preemption.--
            (1) In general.--This Act preempts any law, rule, 
        regulation, requirement, standard, or other provision having 
        the force and effect of law of any State, or political 
        subdivision of a State, expressly relating to the transmission 
        or contents of communications relating to the assertion of 
        patent rights.
            (2) Effect on other state laws.--Except as provided in 
        paragraph (1), this Act shall not be construed to preempt or 
        limit any provision of any State law, including any State 
        consumer protection law, any State law relating to acts of 
        fraud or deception, and any State trespass, contract, or tort 
        law.
    (b) Enforcement by State Attorneys General.--
            (1) In general.--In any case in which the attorney general 
        of a State has reason to believe that an interest of the 
        residents of that State has been adversely affected by any 
        person who violates section 2, the attorney general of the 
        State, may bring a civil action on behalf of such residents of 
        the State in a district court of the United States of 
        appropriate jurisdiction--
                    (A) to enjoin further such violation by the 
                defendant; or
                    (B) to obtain civil penalties.
            (2) Maximum civil penalty.--Notwithstanding the number of 
        actions which may be brought against a person under this 
        subsection, a person may not be liable for a total of more than 
        $5,000,000 for a series of related violations of section 2.
            (3) Intervention by the ftc.--
                    (A) Notice and intervention.--The attorney general 
                of a State shall provide prior written notice of any 
                action under paragraph (1) to the Commission and 
                provide the Commission with a copy of the complaint in 
                the action, except in any case in which such prior 
                notice is not feasible, in which case the attorney 
                general shall serve such notice immediately upon 
                instituting such action. The Commission shall have the 
                right--
                            (i) to intervene in the action;
                            (ii) upon so intervening, to be heard on 
                        all matters arising therein; and
                            (iii) to file petitions for appeal.
                    (B) Limitation on state action while federal action 
                is pending.--If the Commission has instituted a civil 
                action for violation of section 2, no State attorney 
                general 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 such section 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 the attorney general of a State from 
        exercising the powers conferred on the attorney general by the 
        laws of that State to--
                    (A) conduct investigations;
                    (B) administer oaths or affirmations; or
                    (C) compel the attendance of witnesses or the 
                production of documentary and other evidence.

SEC. 5. DEFINITIONS.

    In this Act:
            (1) Bad faith.--The term ``bad faith'' means, with respect 
        to section 2(a), that the sender--
                    (A) made knowingly false or knowingly misleading 
                statements, representations, or omissions;
                    (B) made statements, representations, or omissions 
                with reckless indifference as to the false or 
                misleading nature of such statements, representations, 
                or omissions; or
                    (C) made statements, representations, or omissions 
                with awareness of the high probability of the 
                statements, representations, or omissions to deceive 
                and the sender intentionally avoided the truth.
            (2) Commission.--The term ``Commission'' means the Federal 
        Trade Commission.
            (3) Final determination.--The term ``final determination'' 
        means, with respect to the invalidity or unenforceability of a 
        patent, that the invalidity or unenforceability has been 
        determined by a court of the United States or the United States 
        Patent and Trademark Office in a final decision that is 
        unappealable or for which any opportunity for appeal is no 
        longer available.
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