As we advised in a previous post, there seems to be an all-out war against so-called patent trolls. A patent troll is, in general, a pejorative term associated with entities that do not practice their own patents but nonetheless assert those patents against others. Also known as “patent assertion entities,” patent trolls often “assert” their patents by way of mass mailing letters to accused infringers demanding that the accused immediately take a license in the subject patent or face oppressive litigation. The battle against patent trolls continues to wage on several fronts, from the White House, to the FTC, to numerous state houses attempting to curb the practice of sending vexatious patent license demand letters.
Last week, Missouri Governor Jay Nixon signed into law legislation aimed at repelling patent trolls, at least for Missouri residents. A copy of the bill is attached here. Missouri law now provides a private right of action to recipients of bad faith patent licensing demand letters, allowing for damages of up to $10,000 per occurrence, as well as attorneys’ fees expended in the effort. The law also authorizes the Missouri Attorney General to pursue entities perceived to be trolling in Missouri for greenmail-type settlements.
Missouri’s actions to protect its citizens from patent trolls may ultimately prove to be for naught. Late last week, the U.S. House of Representatives Subcommittee on Commerce, Manufacturing, and Trade passed out a bill known as the Targeting Rogue and Opaque Letters Act, or TROL Act. As currently drafted, the bill would make the act of sending a patent demand letter “in bad faith” punishable as an “unfair or deceptive act” under the Federal Trade Commission (FTC) Act. Sending a letter would only be a crime if the letter met certain conditions, such as attempting to assert an invalid patent. However, the TROL Act expressly preempts state laws regarding demand letters (this means the federal law replaces the state laws and renders them a nullity).
Congress has focused much attention over the last few years on the types of patent trolls that send out thousands of demand letters. Senator Claire McCaskill (Dem.-MO) has introduced similar legislation in the Senate. Senator McCaskill has been a vocal opponents of patent trolls, at times referred to them as “bottom feeders and “pond scum” and also referring to their demand letters as “scams.” The House bill will now go for a vote before the full Energy and Commerce Committee. We will continue to monitor the situation and report to you the potential impacts to your business.