BILL NUMBER: SB 681	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Hill

                        FEBRUARY 27, 2015

   An act to add Title 19 (commencing with Section 3273.5) to Part 4
of Division 3 of the Civil Code, relating to civil law.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 681, as introduced, Hill. Civil law: patents.
   Existing federal law provides for the issuance and enforcement of
patents, makes a person who actively induces infringement of a patent
liable as an infringer, and establishes rights and remedies for
infringement of patents.
   This bill would make it unlawful to send a written communication
stating that the recipient, as defined, is or may be infringing, or
has or may have infringed, on a United States patent if the sender of
the communication, in bad faith, makes a specified statement, seeks
compensation for specified conduct, or fails to include specified
information in the communication. The bill would establish an
affirmative defense if the sender of the communication demonstrates
that the statement, representation, or omission was a mistake made in
good faith. The bill would provide that a person who sends a
communication in violation of these provisions may be enjoined and is
liable for a civil penalty of up to $2,500 for each violation. The
bill would also specify that its provisions are only enforceable by
the Attorney General or by an attorney acting on behalf of the state.

   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Title 19 (commencing with Section 3273.5) is added to
Part 4 of Division 3 of the Civil Code, to read:

      TITLE 19.  Patent Demands


   3273.5.  For the purposes of this title, the following definitions
shall apply:
   (a) "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.
   (b) "Recipient" means a person who purchases, rents, leases, or
otherwise obtains a product or service in the commercial market that
is not for resale in the commercial market and that is, or later
becomes, the subject of a patent infringement allegation.
   3273.6.  (a) It is unlawful 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 recipient is or may be infringing, or has or may have
infringed, the patent and is liable or owes compensation to another,
if any of the following conditions are met:
   (1) The sender of the communication makes, in bad faith, any of
the following statements or representations:
   (A) That the sender has the right to license or enforce the patent
at the time the communications are sent, if the sender is not a
person with that right.
   (B) That a civil action asserting a claim of infringement of the
patent has been filed against either the recipient or against other
persons.
   (C) That legal action for infringement of the patent will be taken
against the recipient.
   (D) That the sender is the exclusive licensee of the patent
asserted in the communications.
   (E) That persons other than the recipient purchased a license for
the patent asserted in the communications.
   (F) That persons other than the recipient purchased a license, and
the sender does not disclose that the license is unrelated to the
alleged infringement or the patent asserted in the communications.
   (G) That an investigation of the recipient's alleged infringement
has occurred.
   (H) That 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 that the activity was held, in a
final determination, not to infringe the patent.
   (2) The sender of the communication seeks, in bad faith,
compensation for any of the following:
   (A) A patent claim that has been determined to be unenforceable or
invalid against the recipient in a final determination.
   (B) Activity undertaken by the recipient after expiration of the
patent asserted in the communication.
   (C) Activity of the recipient that the sender knew was authorized,
with respect to the patent claim that are the subject of the
communication, by a person with the right to license the patent.
   (3) The sender of the communication fails, in bad faith, to
include any of the following in the communication:
   (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
the person, unless that person is a public company and the name of
the public company is identified.
   (B) Identification of at least one patent issued by the United
States Patent and Trademark Office alleged to have been infringed.
   (C) 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.
   (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) It shall be an affirmative defense that the sender did not act
in bad faith if the sender demonstrates that the statement,
representation, or omission was a mistake made in good faith.
Evidence that the sender in the usual course of business sends
written communications that do not violate the provisions of this
title shall be sufficient to demonstrate good faith. Good faith may
also be demonstrated by other evidence.
   3273.7.  (a) A person who sends a communication in violation of
Section 3273.6 may be enjoined in a court of competent jurisdiction
and is liable for a civil penalty not to exceed two thousand five
hundred dollars ($2,500) for each violation. The penalty collected in
an action by the Attorney General or an attorney acting on behalf of
the state shall be paid to the General Fund.
   (b) Notwithstanding any other law, the Attorney General or an
attorney acting on behalf of the state shall have the sole authority
to enforce this title. This title shall not be construed to create a
private right of action.