Lexology comments on innovation Act
Heightened Pleading Requirements:
The proposed Innovation Act also requires plaintiffs to disclose significantly more information in its initial pleadings than previously required. Patent-plaintiffs would be required to explain why they are suing a particular defendant in their court pleadings. The bill also requires courts to decide early on whether a patent is invalid to discourage plaintiffs from dragging out lawsuits in an attempt to obtain settlements.
The proposed bill also introduces a fee-shifting structure that departs from the traditional rule that each party bears the cost of its own attorney’s fees. Under the new provision, judges would be required to make parties who bring lawsuits that are not “reasonably justified in law and fact” to pay their opponents’ legal fees. This section is arguably the most controversial provision of the bill and the one responsible for Sen. Harry Reid refusing to bring the original Innovation Act to the Senate floor. The bill would create a presumption of awarding attorney fees to the prevailing party. Under this structure, a court would be required to award attorney fees and “other expenses” to the prevailing party “unless the court finds that the position and conduct of the non-prevailing party or parties were reasonably justified in law and fact or that special circumstances (such as severe economic hardship to a named inventor) make an award unjust.” This provision serves as a drastic change from the current standard in patent cases where attorney fees are only awarded in “exceptional cases.” The bill also discourages a patentee from offering a covenant not to sue as a means to settle infringement litigation, making such an offer an admission that the patentee is the “non-prevailing party” and thus a risk for an award of fees and costs to the accused infringer (Sec. 3(b)(1)(c)).
Can Congress alter the pleading requirements of the Federal Rules of Civil Procedure for certain classes of cases?
Should it? Sometimes discovery is needed to establish an infringement.