Patent assertion entities (PAEs) are major players in the contemporary patent litigation world. PAE patent litigation, which is defined by a high volume of lawsuits against the same or similar defendants and generally weak infringement claims, has drawn criticism from scholars, the government, and the business world. Part of this criticism has focused on the potential for PAEs to engage in conduct that violates the antitrust laws. In fact, some targets of PAE lawsuits have tried to bring antitrust claims and counterclaims against their PAE foes. However, PAEs can be shielded from antitrust claims by the Supreme Court’s Noerr-Pennington doctrine, which holds that under the First Amendment, petitioning the government cannot give rise to antitrust liability. Because PAE litigation would form the basis of an antitrust claim against a PAE, and filing suit is a form of protected petitioning, the doctrine can protect PAEs even when PAEs engage in blatantly anticompetitive conduct. The Supreme Court has developed a “sham petitioning” exception to Noerr-Pennington antitrust immunity, which, at first glance, seems like it should apply to PAE suits, given their repetitive nature and high failure rate. However, due to a requirement that sham lawsuits be “objectively” unreasonable, the current sham exception presents a high bar for PAE targets seeking to strip PAEs of antitrust immunity, especially when PAEs can point to the uncertainties of patent litigation to assert a reasonable belief that their lawsuits would succeed. In this context, this Article proposes a legislative solution to the issue of Noerr-Pennington immunity for PAEs, which would foreclose antitrust immunity for the PAE in situations in which a reasonable patent holder would not bring suit. This “reasonable patent holder” test would focus on a set of factors for determining whether the PAE has done its due diligence in researching the validity and infringement of its patent before suing, as any reasonable patent holder would do. This test promises to capture PAE lawsuits which, on their face, seem like the kind of shams that the Supreme Court originally determined should not be granted Noerr-Pennington immunity without impinging on the First Amendment petitioning rights that the Noerr-Pennington doctrine was meant to protect. By stripping PAEs of antitrust immunity in appropriate circumstances, the test would allow targets of PAE lawsuits to have the merits of their antitrust claims heard and decided, thereby advancing the development of antitrust law as applied to PAEs.
