Wednesday, February 01, 2006

LEGISLATION PROPOSES MANDATORY SANCTIONS FOR "FRIVOLOUS" LAWSUITS: The U.S. Senate is currently reconsidering legislation (H.R. 420) to amend Rule 11 of the Federal Rules of Civil Procedure to make sanctions mandatory against parties and attorneys who file frivolous lawsuits.

In January, U.S. Rep. Lamar Smith reintroduced the "Lawsuit Abuse Reduction Act" after the House passed the measure in October 2005 by a 228-184 vote. Prior to that, the House passed a similar measure that was ultimately stalled without resolution. The proposed law is the latest effort in the tort reform movement to protect businesses against frivolous lawsuits, and, in case you weren't aware, patent infringement is a tort.

While the law isn't specifically directed towards patent litigation, there are portions of this bill that may have an impact.

For one, the bill would reinstate the imposition of mandatory sanctions for parties and attorneys who file frivolous lawsuits. Prior to 1993, the Federal Rules of Civil Procedure provided mandatory sanctions ("Rule 11 sanctions") on attorneys who filed abusive or harassing litigation. Subsequently, the rules were changed to provide sanctions only on a discretionary basis by the presiding judge. Also, a 21-day "safe harbor" provision was added to allow an attorney 21 days to withdraw a lawsuit alleged to be frivolous, without any repercussions. The proposed law would do away with these amendments.

The law also provides a "three strikes" provision, where, if a federal district judge determines an attorney has violated Rule 11 three or more times, the judge "shall suspend that attorney from the practice of law in that federal district court for one year."

Furthermore, an anti-forum-shopping provision was inserted to prevent plaintiff's attorneys from "gaming" the system to file cases in courts where sympathetic judges preside (defendants affectionately refer to these courts as "judicial hellholes"). However, after looking at the current version of the bill, it appears this provision won't apply to patent cases.

The relevant portion of the proposed law states that a personal injury claim filed in State or Federal court may be filed only in the State and, within that State, in the county or Federal district in which:

(1) the person bringing the claim resides at the time of filing or resided at the time of the alleged injury;

(2) the alleged injury or circumstances giving rise to the personal injury claim allegedly occurred;

(3) the defendant's principal place of business is located, if the defendant is a
corporation; or

(4) the defendant resides, if the defendant is an individual.


However, the proposed law defines the term "personal injury claim" to mean a civil action brought under State law by any person to recover for a person's personal injury. Since patent law is governed by federal law, it appears that patent infringement lawsuits will be exempted (you can breathe easier now, E.D. Texas).

To get more details on the proposed law, click here.

See the ABA's summary of the bill here

See Phillip Brook's Patent Infringement Updates blog here.

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