BILL ANALYSIS

C.S.H.B. 5543

By: Meyer

Trade, Workforce & Economic Development

Committee Report (Substituted)

BACKGROUND AND PURPOSE

The bill author has informed the committee that there are reports of companies that file patent claims without any intention of ever developing a product or service, these companies use patent infringement claims to win court judgments for profit or to stifle competition, and the end result is bad faith infringement threats and licensing demands that require companies to spend a significant amount of money to settle these claims without any addition to the public good. C.S.H.B. 5543 seeks to curb this behavior by establishing that a violation of statutory provisions prohibiting bad faith claims of patent infringement is a deceptive trade practice under the Deceptive Trade Practices-Consumer Protection Act and is actionable by an aggrieved end user under that act.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 5543 amends the Business & Commerce Code to replace a provision establishing that statutory provisions relating to bad faith claims of patent infringement do not create a private cause of action for a violation of statutory provisions prohibiting such bad faith claims with a provision establishing that a violation of statutory provisions prohibiting bad faith claims of patent  infringement is a deceptive trade practice under the Deceptive Trade Practices-Consumer Protection Act and is actionable by an aggrieved end user under that act. The bill clarifies that, for purposes of an action brought under the Deceptive Trade Practices-Consumer Protection Act and the bill's provisions, the term "consumer" includes a business consumer that has assets of $25 million or more or that is owned or controlled by a corporation or entity with assets of $25 million or more.

C.S.H.B. 5543 requires a court, upon motion by an end user and a finding by the court that an end user has established a reasonable likelihood that a person has made a bad faith assertion of patent infringement in violation of provisions relating to deceptive trade practices, to require the person to post a bond in an amount equal to a good faith estimate of the end user's fees and costs to litigate the claim. The bill caps the amount of such a bond at $500,000 and authorizes the court to waive the bond requirement if the court finds that the person has available assets equal to the amount of the proposed bond or for other good cause shown.

EFFECTIVE DATE

September 1, 2025.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 5543 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The substitute includes a provision absent from the introduced clarifying that, for purposes of an action brought under the Deceptive Trade Practices-Consumer Protection Act and the bill's provisions, "consumer" includes a business consumer that has assets of $25 million or more or that is owned or controlled by a corporation or entity with assets of $25 million or more.