The U.S. House of Representatives passed the Innovation Act on December 5, 2013. The bill, which seeks to curb “abusive patent litigation,” was passed by a 325-91 vote.

Efforts to reform patent litigation tactics are currently receiving broad bipartisan support in Congress and the White House. A similar bill entitled the “Patent Transparency and Improvements Act of 2013” (S. 1720) was recently introduced in the Senate. A Senate committee will hold a hearing on December 17, 2013 to consider the Senate bill.

The Senate bill differs from the bill passed by the House in several significant ways. For instance, S. 1720 lacks provisions relating to heightened pleading standards, awarding attorneys’ fees, or limitations on discovery (see summary below). The Senate bill authorizes the Federal Trade Commission to take action against parties engaging in unfair and deceptive practices related to sending inappropriate demand letters alleging patent infringement. The differences between the two bills must be reconciled before any new legislation is enacted.

The most relevant provisions of the Innovation Act passed by the House are summarized below.

• Estoppel accompanying post-grant review proceedings: Under the America Invents Act (AIA), a petitioner in a post-grant review proceeding (PGR) is estopped from later arguing any ground that the petitioner raised or reasonably could have raised in the proceeding. The new bill would amend this to estop the petitioner from raising only those grounds that were actually raised in PGR.

• Heightened pleading standard for patent infringement complaints: Complaints for infringement must include a particularized statement identifying each patent and claim asserted, each accused device or process (with relevant model numbers), and how each claim corresponds to each accused device or process. A complaint must also identify the plaintiff’s right to assert the patent, other complaints asserting the patent(s), and any licenses covering the patent(s). This does not apply to brand-generic infringement actions under the Hatch-Waxman Act. A party must also identify information that is not disclosed in the complaint and explain why it is not disclosed.

• Awarding attorneys’ fees to prevailing party: Creates an assumption that attorney-fees are awarded to the prevailing party unless the court finds that the non-prevailing party’s position was “reasonably justified . . . or that special circumstances make an award unjust." A plaintiff that unilaterally offers the adverse party a covenant not to sue will be deemed a non-prevailing party.

• Limit on discovery: Until a claim construction decision is issued, discovery is limited to determining the meaning of claim terms including “any interpretation . . . used to support the claim of infringement.” Courts retain the discretion to expand discovery if necessary, and parties are able to opt-out of this limitation.

• Expanded disclosure to adverse parties: The patentee in an infringement action must disclose any assignee, any entity with a license or enforcement rights, any entity with a financial interest in either the patents at issue or the patentee, and the "ultimate parent entity" of the patentee (i.e. an "entity which is not controlled by any other entity").

• Ongoing duty of disclosure to the Patent Office: The plaintiff or subsequent patent owner must update the assignee information within 90 days of any change in the assignee.

• Narrow claim construction for post-grant review and inter partes review: Instead of applying the “broadest reasonable interpretation” of a claim, the United States Patent and Trademark Office (USPTO) must construe each claim according to its “ordinary and customary meaning . . . as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent" (i.e. the standard applied by district courts).

• Mandatory stay for lawsuits against a customer: Any suit against a customer must be stayed if the manufacturer is a party in a separate action on a patent related to the same product and the customer agrees to be bound by the decision in the action against the manufacturer.

• Codifies obviousness-type double patenting doctrine for patents filed under the first-inventor-to-file (AIA) regime.

• Codifies the reduction of patent term adjustment for “B delay” after an applicant files a request for continued examination (RCE) (“B delay” refers to an application failing to issue within three years of the filing date). This applies for any patent or application pending on the date of enactment.

• Specificity required to prove willful infringement: Demand letters can only be used as evidence of willful infringement if the letter describes with particularity which patents are infringed, who owns the asserted patents and how the letter’s recipient is infringing the patents.