HR7140-119

What This Bill Does

The CLEAR Act adds a new 35 U.S.C. 299A titled Stay of action against retailer or end user. In patent infringement suits, a court must stay at least the portion of the case against a retailer or end user of an accused product if the manufacturer is already a party to the action or a separate case involving the same patent and accused instrumentality; the retailer or end user did not manufacture, assemble, integrate, or transform the relevant product; the retailer or end user agrees to be bound by issues decided in the manufacturer case and waives future section 282(b) defenses for the same accused product from the same manufacturer after final judgment; and the retailer or end user agrees to be bound by any injunction. The stay lifts if the manufacturer cannot satisfy a damages judgment. The court may hold an initial inquiry and require bond or escrow where there is a substantial likelihood of nonpayment. The court may require stipulations and limited discovery about the end user's or retailer's use of the product. Stay motions must be filed within six months of the first pleading identifying the accused product, six months after the manufacturer becomes a party, or by the first scheduling order, whichever is later. The Act applies to complaints served on or after enactment.

Who Benefits and How

Retailers, small businesses, customers, schools, hospitals, and other end users accused of patent infringement benefit because litigation against them can pause while the manufacturer litigates the core product dispute. Product manufacturers benefit because the dispute can be centralized around the party that made or supplied the accused instrumentality. Courts benefit from a rule that can reduce duplicative discovery and inconsistent rulings. Consumers may benefit if retailers are less pressured to settle weak claims only to avoid defense costs.

Who Bears the Burden and How

Patent owners and licensing entities face delayed leverage against downstream sellers or users and may need to prove manufacturer insolvency risk to lift a stay or secure bond or escrow. Retailers and end users must waive certain future defenses, agree to be bound by the manufacturer case, accept injunctions, stipulate to product use, and participate in limited discovery. Federal judges and court staff must decide stay motions, manufacturer-payment risk, bond or escrow issues, and timing deadlines. Manufacturers may face more pressure to litigate representative disputes thoroughly.

Key Provisions

• Requires courts to stay patent claims against qualifying retailers or end users when the manufacturer is litigating the same accused product.
• Requires the retailer or end user to waive future defenses and be bound by issues decided in the manufacturer case.
• Allows a stay to lift if the manufacturer cannot satisfy a damages judgment.
• Allows courts to require bond or escrow when manufacturer payment is substantially doubtful.
• Allows stipulations and limited discovery about retailer or end-user use of the accused product.
• Applies the new stay rule to complaints served on or after enactment.