The CLEAR Act requires courts to pause patent infringement lawsuits against retailers and end users if the product's manufacturer is also involved in the litigation and certain conditions are met.
Laurel Lee
Representative
FL-15
The CLEAR Act aims to provide relief to retailers and end users facing patent infringement lawsuits by requiring courts to grant a stay of action against them if the product's manufacturer is also involved in the litigation. This stay is conditional upon the retailer or end user agreeing to be bound by the outcome of the case against the manufacturer. The legislation seeks to streamline patent litigation by focusing initial proceedings on the entity primarily responsible for the accused product.
CLEAR Act Shifts Patent Battles: Retailers and Small Businesses Get a Legal 'Pause Button' in Infringement Lawsuits
The Customer Legal Ease and Relief (CLEAR) Act aims to stop the practice of dragging retailers and everyday users into expensive patent lawsuits when they didn't actually build the product in question. Under this bill, if a patent holder sues a store or a customer for using an infringing product, the court must hit the 'pause' button (a stay) on that case if the manufacturer is also involved in the litigation. This means if you're a local boutique owner selling a smart device, or a small business using a specific software, you wouldn't have to spend thousands on lawyers while the people who actually designed the tech fight it out in court. To get this relief, the retailer or end user has to meet specific criteria: they can't have modified the product, and they must agree to follow whatever final ruling the manufacturer receives.
The 'Not My Problem' Defense
This bill creates a clear path for businesses that are just the middleman. For example, if a tech company claims a specific barcode scanner violates their patent, they often sue every grocery chain using it. Under Section 2, those grocery chains can step aside if the scanner's manufacturer is also being sued. However, there's a catch: the retailer has to waive their right to certain defenses later. It’s essentially a trade-off—you get to save money on legal fees now, but you’re tethered to the manufacturer’s legal fate. If the manufacturer loses, you lose too, and you can't try to argue the case differently later on.
Accountability and the 'Judgment-Proof' Clause
While the bill protects the 'little guy,' it includes safeguards to ensure patent holders aren't left holding an empty bag. If a court finds a 'substantial likelihood' that a manufacturer won't be able to pay the damages—perhaps because they are nearing bankruptcy or are an unreachable overseas entity—the stay can be lifted. In some cases, the court might even require the retailer to put money into an escrow account or post a bond (Section 299A). This prevents a scenario where a manufacturer takes the heat for a retailer, only to disappear when the bill comes due, leaving the inventor with no way to collect what they’re owed.
Tight Deadlines and Long-Term Stakes
Timing is everything with this legislation. A business has a strict window to ask for this stay—usually within six months of being served or by the time the first scheduling order is entered. For inventors and patent holders, this could mean a slower path to justice, as they are forced to focus solely on the manufacturer first. While this streamlines the process by focusing on the source of the infringement, it could also delay settlements if a manufacturer drags their feet. For the busy professional or small business owner, this bill offers a shield against 'patent trolls' who target end users, but it requires a high degree of trust in the manufacturer’s legal team to protect your interests.