Today, by a vote of 325-91, the U.S. House passed the Innovation Act (H.R. 3309), a Bill sponsored by the House Judiciary Committee Chairman Robert W. Goodlatte. The Bill is intended to impose new rules and stricter standards on patent infringement lawsuits. The Bill is aimed at stopping the abusive litigation practices by non-practicing entities, commonly known as “patent trolls”. The Bill was supported by the Electronic Frontier Foundation, Americans for Tax Reform, Consumer Electronics Association, Business Software Alliance, TechNet, the Coalition for Patent Fairness, and the Food Marketing Institute.

Lawmakers proposed the Bill after hearing complaints of non-practicing entities threatening patent infringement lawsuits based on questionable patents and loosely supported infringement allegations. Companies who receive such demands complain of feeling pressured to settle a non-meritorious complaint to avoid expensive litigation with the possibility of large damages awards.

The House Bill will attempt to curb non-meritorious patent claims through:

1. Heightened pleading requirements. Plaintiffs in patent litigation matters must plead more details about the patent involved and the alleged infringement. The heightened pleading requirements are intended curb a perceived practice of filing vague lawsuits without allegations regarding how the patent was infringed;

2. Joinder. The Bill provides for the joinder of an “interested party” where a defendant shows the plaintiff has no substantial interest in the patent other than asserting it in litigation. The joinder requirement is intended to curb the perceived practice of non-practicing entities forming shell companies to disguise their behavior;

3. Attorney’s Fees to the Prevailing Party. The Bill provides that the court “shall” award reasonable fees and other expenses to the prevailing party unless the position of the non-prevailing party was “substantially justified” or “special circumstances make an award unjust.” This provision is intended to give a non-practicing entity a stake in the litigation and a downside risk to non-meritorious claims;

4. Limitations on Discovery. The Bill will allow only limited discovery until after claim construction. This provision was intended to address the substantial expense involved in defending a lawsuit that may turn out to be non-meritorious after claim construction;

5. Protecting Consumers. The Bill will allow technology companies to fight lawsuits on behalf of their customers. This provision is intended to curb the practice of suing end users, rather than technology vendors, as an intimidation tactic.

The White House expressed its support for patent litigation reform earlier this year. And the Senate is considering a similar Bill, The Patent Transparency and Improvements Act of 2013, proposed by Judiciary Committee Chairperson Senator Patrick Leahy.

The Senate’s version of the Bill would take some of the same measures to address abusive patent litigation. Of particular interest to attorneys and those who might have received demand letters from non-practicing entities are requirements in the Senate version of the Bill that all beneficial owners be disclosed; protecting customers from litigation while manufacturers litigate infringement lawsuits relating to the same patent; and providing that the FTC should take action to stop the unfair and deceptive trade practice of sending infringement demand letters in bad faith.

The Innovation Act (H.R. 3309) was the subject of lengthy debate in the House, as many parts of the Bill raised concerns among Intellectual Property organizations. The Federal Circuit Bar President complained that the Bills are “neither sufficiently precise nor likely to be effective”. And, the American Intellectual Property Law Association complained that the provisions in the Bill are “too broad and too sweeping”.

Despite opposition to the Bill, it appears that some sort of patent litigation reform will in fact pass both the Senate and the House and be signed into law by the President very soon. The action by the House today is the beginning of that process of corralling the non-practicing entities and reforming potentially abusive patent litigation.