Amended in Senate May 5, 2015

Senate BillNo. 681


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 amended, 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 tobegin delete send aend deletebegin insert engage in a pattern or practice of sendingend insert writtenbegin delete communicationend deletebegin insert communications,end insert 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 thebegin delete communication, in bad faith,end deletebegin insert communicationend insert makes a specifiedbegin delete statement,end deletebegin insert false statement or representation in bad faith, fraudulentlyend insert seeks compensation for specified conduct, orbegin delete fails to includeend deletebegin insert fraudulently conceals or omitsend insert specified information in the communication.begin delete 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. Theend delete

begin insertTheend insert 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.begin insert The bill would specify that it does not impair or impede any other rights, causes of action, claims, or defenses available under other law and that the remedies provided for under its provisions are cumulative with any other remedies available under other law.end insert

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

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Title 19 (commencing with Section 3273.5) is
2added to Part 4 of Division 3 of the Civil Code, to read:

3 

4Title 19.  Patent Demands

5

 

6

3273.5.  

For the purposes of this title, the following definitions
7shall apply:

8(a) “Final determination” means, with respect to the invalidity
9or unenforceability of a patent, that the invalidity or
10unenforceability has been determined by a court of the United
11States or the United States Patent and Trademark Office in a final
12decision that is unappealable or for which any opportunity for
13appeal is no longer available.

14(b) “Recipient” means a person who purchases, rents, leases,
15or otherwise obtains a product or service in the commercial market
16that is not for resale in the commercial market and that is, or later
17becomes, the subject of a patent infringement allegation.

18

3273.6.  

begin delete(a)end deletebegin deleteend deleteIt is unlawful for a person, in connection with the
19assertion of a United States patent, to engage in a pattern or practice
20of sending written communications that state or represent that the
21recipient is or may be infringing, or has or may have infringed,
22the patent and is liable or owes compensation to another, if any of
23the following conditions are met:

begin delete

24(1)

end delete

25begin insert(a)end insert The sender of the communication makes, in bad faith, any
26of the following statements orbegin delete representations:end deletebegin insert representations,
27knowing those statements or representations are false:end insert

begin delete

28(A)

end delete

29begin insert(1)end insert That the sender has the right to license or enforce the patent
30at the time the communications are sent, if the sender is not a
31person with that right.

begin delete

P3    1(B)

end delete

2begin insert(2)end insert That a civil action asserting a claim of infringement of the
3patent has been filed against either the recipient or against other
4persons.

begin delete

5(C)

end delete

6begin insert(3)end insert That legal action for infringement of the patent will be taken
7against the recipient.

begin delete

8(D)

end delete

9begin insert(4)end insert That the sender is the exclusive licensee of the patent
10asserted in the communications.

begin delete

11(E)

end delete

12begin insert(5)end insert That persons other than the recipient purchased a license for
13the patent asserted in the communications.

begin delete

14(F)

end delete

15begin insert(6)end insert That persons other than the recipient purchased a license,
16and the sender does not disclose that the license is unrelated to the
17alleged infringement or the patent asserted in the communications.

begin delete

18(G)

end delete

19begin insert(7)end insert That an investigation of the recipient’s alleged infringement
20has occurred.

begin delete

21(H)

end delete

22begin insert(8)end insert That the sender, or an affiliate of the sender, previously filed
23a civil action asserting a claim of infringement of the patent based
24on the activity that is the subject of the written communication
25when the sender knew that the activity was held, in a final
26determination, not to infringe the patent.

begin delete

27(2)

end delete

28begin insert(b)end insert The sender of the communicationbegin delete seeks, in bad faith,end delete
29begin insert fraudulently seeksend insert compensation for any of the following:

begin delete

30(A)

end delete

31begin insert(1)end insert A patent claim that has been determined to be unenforceable
32or invalid against the recipient in a final determination.

begin delete

33(B)

end delete

34begin insert(2)end insert Activity undertaken by the recipient after expiration of the
35patent asserted in the communication.

begin delete

36(C)

end delete

37begin insert(3)end insert Activity of the recipient that the sender knew was authorized,
38with respect to the patent claim that are the subject of the
39communication, by a person with the right to license the patent.

begin delete

40(3)

end delete

P4    1begin insert(c)end insert The sender of the communicationbegin delete fails, in bad faith, to
2include any of the following in the communication:end delete
begin insert fraudulently
3conceals or omits any of the following information from the
4communication, when that information is readily available to the
5sender at the time the communication is sent:end insert

begin delete

6(A)

end delete

7begin insert(1)end insert The identity of the person asserting a right to license the
8patent to, or enforce the patent against, the recipient, including the
9identity of any parent entity and the ultimate parent entity of the
10person, unless that person is a public company and the name of
11the public company is identified.

begin delete

12(B)

end delete

13begin insert(2)end insert Identification of at least one patent issued by the United
14States Patent and Trademark Office alleged to have been infringed.

begin delete

15(C)

end delete

16begin insert(3)end insert Identification, to the extent reasonable under the
17 circumstances, of at least one product, service, or other activity of
18the recipient that is alleged to infringe the identified patent.

begin delete

19(D)

end delete

20begin insert(4)end insert A description, to the extent reasonable under the
21circumstances, of how the product, service, or other activity of the
22recipient infringes an identified patent and patent claim.

begin delete

23(E)

end delete

24begin insert(5)end insert A name and contact information for a person the recipient
25may contact about the assertions or claims relating to the patent
26contained in the communications.

begin delete

27(b) It shall be an affirmative defense that the sender did not act
28in bad faith if the sender demonstrates that the statement,
29representation, or omission was a mistake made in good faith.
30Evidence that the sender in the usual course of business sends
31written communications that do not violate the provisions of this
32title shall be sufficient to demonstrate good faith. Good faith may
33also be demonstrated by other evidence.

end delete
34

3273.7.  

(a) A person who sends a communication in violation
35of Section 3273.6 may be enjoined in a court of competent
36jurisdiction and is liable for a civil penalty not to exceed two
37thousand five hundred dollars ($2,500) for each violation. The
38penalty collected in an action by the Attorney General or an
39attorney acting on behalf of the state shall be paid to the General
40Fund.

P5    1(b) begin deleteNotwithstanding any other law, the end deletebegin insertThe end insertAttorney General
2or an attorney acting on behalf of the state shall have the sole
3 authority to enforce this title.begin delete Thisend deletebegin insert Nothing in thisend insert title shallbegin delete notend delete
4 be construed to create a private right of action.

begin insert

5(c) Nothing in this title shall be construed to impair or impede
6any other rights, causes of action, claims, or defenses available
7under other law. The remedies provided in this title are cumulative
8with any other remedies available under other law.

end insert


O

    98