Michael Sandonato, partner in the law firm of Venable LLP, describes a bill in the House of Representatives to prevent patent trolls from using the International Trade Commission to extort royalty payments.
H.R. 8037, the Advancing America’s Interests Act (AAIA), seeks to curb abuse by certain patent licensing entities — derisively called “patent trolls” by many — that have been using the ITC’s review process for financial gain. The legislation seeks to establish a “domestic industry” standard for patent holders to win relief from ITC, which can order U.S. Customs and Border Protection to stop products at the border that are deemed to be infringing on the legitimate rights of patent holders.
That way it is now, a so-called non-practicing entity (NPE) — one that holds a patent but doesn’t actually manufacture the product in question — can win a blocking order from ITC if it can prove that it has a “domestic interest” that warrants protection. The classic way to demonstrate that is to show that the complaining party manufactures the product in the U.S. If it doesn’t, it can either cite its own expenditures in licensing the patent to others, or the manufacturing activities of a licensee.
“Currently, all [the complainant] needs to show is that it licensed the patent to company X, which is indeed making a product that’s covered by the patent,” says Sandonato. “The history of how that product was developed is not important.” Under AAIA, however, such complaints of patent infringement could not go forward at ITC unless the manufacturer of the product in question voluntarily joined in the action.
The coronavirus pandemic makes the matter even more urgent, Sandonato suggests. One motivation behind the bill is concern over “an inappropriately issued exclusion order that could have a negative impact on the supply chain.”
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