Dear Doc:
It’s always been expensive for patent owners to go to court, what with hiring a lawyer, but we have been able to buy insurance to help with the cost of litigation, or turn to litigation finance firms. We have also been able to use the courts when our patent rights were violated by the government. I hear that our access to the courts is in danger now. What can you tell me?
Signed,
Individual Inventor
Dear II:
You hear right! A pair of proposals being pushed through Congress by Republicans on largely party-line votes would severely restrict our right to access the legal system when our patents are infringed. If enacted, it is no exaggeration to say that only the super-rich and large corporations would be able to use the court system.
The Danger of Limiting Access to Courts for Patent Infringement
The first of these bills is part of the President’s so-called “One Big Beautiful Bill Act,” and it contains the following provision in Section 70302:
“No court of the United States may enforce a contempt citation for failure to comply with an injunction or temporary restraining order if no security was given when the injunction or order was issued pursuant to Federal Rule of Civil Procedure 65(c), whether issued prior to, on, or subsequent to the date of enactment of this section.”
In simple terms, this means that if any part of the U.S. Government infringes your patent and you bring suit, you would have to post a bond (putting up money in court), potentially of millions of dollars, in order to get an injunction to stop the infringement. Traditionally, judges have not required such bonds when suing the government as a way of ensuring that individual rights are protected by the courts.
This provision goes far beyond patents, of course. It would essentially make it impossible for individuals and non-profit organizations to sue to enforce federal laws providing civil rights, equal protection, and many other laws. But the effect on patent owners would be to allow the government to keep infringing your patent for its entire lifetime.
“But,” the Doc hears you saying, “what about the First Amendment???”
For those who should have been paying attention in school, the relevant text here is:
Congress shall make no law respecting…the right of the people…to petition the Government for a redress of grievances.
Since going to court to complain that the government is infringing your patent rights is certainly asking that your grievance be redressed, the Doc fails to understand how this part of the so-called Bloated Ugly Bill (BUB) is even being considered, let alone constitutional, but then, there’s a lot that the Doc does not understand these days. It appears that some rights are going to cost more than some others.
Why the “Tackling Predatory Litigation Funding Act” Could Shut Down Enforcement
The second bill, S.1821, is called the “Tackling Predatory Litigation Funding Act.” This bill, which has now been attached to the One Big Beautiful Bill (BUB), imposes a punitive 40.8% tax on litigation funding proceeds. Litigation funding, whether from insurance policies or investor-backed companies, usually provides that in return for footing the costs of a lawsuit (attorney fees and expenses such as expert witness fees), the funder receives a percentage of damages awarded.
If that percentage is specifically taxed at nearly 41%, no funder would ever offer to support litigation, and patent owners who cannot afford the costs (now averaging many millions of dollars per suit) will effectively be shut out of court. Their patents will become effectively worthless because infringers will know that they will never be enforced.
The Doc is hopeful (ever hopeful) that these bills will never become law, but then, the Doc also knows that Hope Is Not a Method. So, for all the good that it will do, please let your representative and senators know that you value patent rights and that these parts of the BUB should be removed with a sledgehammer.
Do you have questions about intellectual property law? Give the attorneys at LW&H a call. They know a lot about that.
Until next month,
The “Doc”
— Lawrence A. Husick, Esq.