Vermont Takes Unprecedented Approach to “Patent Trolls”

The state of Vermont is fighting back against what it calls “unfair business practices” by non-practicing entities. The state passed a law against asserting false patent claims and filed a lawsuit against one so-called patent troll.

 

The new state law, entitled “Bad Faith Assertions of Patent Infringements,” is intended to distinguish between abusive and valid patent infringement claims. The statute includes a private right of action and also allows the state attorney general to enforce violations.

 

Factors that indicate a bad faith patent assertion include failing to identify the patent(s)-at-issue, the patent owner, and exactly how the recipient’s behavior violates the patent; demanding too quick a response or too costly licensing fees; and asserting deceptive or meritless allegations. Meanwhile, factors that suggest a valid patent infringement claim include commercializing the patented invention; being either the original inventor or an educational institution; and successfully enforcing the patent in court.

 

Vermont is also now the first state to file a lawsuit against a non-practicing entity (an NPE). The attorney general’s lawsuit alleges that MPHJ Technology Investments violated state consumer protection laws (not the newly passed law) by threatening to initiate patent infringement lawsuits against small Vermont businesses that did not pay licensing fees.

 

The lawsuit specifically claims that the NPE failed to conduct due diligence to confirm the businesses were infringing prior to sending the demand letters.

 

According to the complaint, the letters were also deceptive because the licensing fees suggested by the NPE of $900-$1200 per employee are higher than those normally charged. The lawsuit seeks an injunction and up to $10,000 in penalties per violation.

 

Given the novel nature of Vermont’s law and the suit, the patent community will be closely monitoring the legal developments surrounding both. It is unclear if the state’s foray into patent law, which is traditionally the jurisdiction of the federal government, will survive judicial scrutiny.

How Can I Help?

If you, or someone you know, need any help with Intellectual Property issues, from filing a patent, trademark or copyright, or just need advice regarding how best to protect your inventions, ideas or your brand, please contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney in Pasadena, California and I am a Rising Star as rated by Super Lawyers Magazine.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman

New Report Finds NPEs Filed Majority of Patent Cases in 2012

Patent infringement litigation by non-practicing entitles (NPEs), also referred to as “patent trolls,” continues to rise dramatically.

In fact, NPEs filed 56 percent of all patent suits, according to a new report by Lex Machina Inc. and the University of California Hastings College of the Law. By comparison, patent trolls filed only 24 percent of patent infringement litigation in 2007.

The new study expanded on the group’s prior research regarding what it calls “patent monetization entities.” The latest report examined 13,000 cases from 2007-2008 and 2011-2012.

Below are several noteworthy findings detailed in the report:

• The number of defendants sued by NPEs decreased slightly from 2011 to 2012, which “may suggest that changes in the joinder rules from the America Invents Act had at least some initial success in pushing patent monetization entities not to cast the net so broadly.”

• Of the parties who filed the greatest number of patent litigations in the years studied, 9 out of 10 are patent monetization entities and only one is an operating company.

• Mechanisms for notifying the public when patents have been asserted in litigation are woefully inadequate. Despite federal requirements, the system was not operative for more than two-thirds of the patents asserted, which “puts small companies at a disadvantage because they cannot easily tell if a patent has been asserted and what territory is being claimed by the patent holder.”

• The newest patents issued are the most frequently asserted in litigation, which “could be an indication that parties are increasingly filing for patents for the primary purpose of assertion.”

This latest report provides new insight into a growing patent trend. NPEs have been a hot topic recently, prompting attention from Congress, the Federal Trade Commission, the U.S. Department of Justice and even the President.

How Can I Help?

If you, or someone you know, need any help with Intellectual Property issues, from filing a patent, trademark or copyright, or just need advice regarding how best to protect your inventions, ideas or your brand, please contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney in Pasadena, California and I am a Rising Star as rated by Super Lawyers Magazine.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman

New ITC Report Highlights IP Infringement Trends

The U.S. International Trade Commissions (ITC) report on cases involving allegations of unfair methods of competition and unfair acts involving imported articles under Section 337 of the Tariff Act of 1930 as amended, 19 U.S.C. § 1337. Because most Section 337 investigations involve allegations of infringement of intellectual property rights, the report offers some interesting insights.

The ITC first notes that Section 337 investigations have increased significantly over the past five years and are expected to remain at elevated levels. In response, the agency has opened a new courtroom that is specially equipped to handle the complex cases that account for much of the IP-based Section 337 docket.

The report also highlights that a substantial number of Section 337 investigations involve IP-based matters regarding high tech products. For instance, computer and telecommunications products accounted for about 25 percent of new investigations instituted in calendar year 2011 and about 30 percent of new investigations in 2012. Other consumer electronic products accounted for about 15 percent of new investigations in 2011 and about 20 percent of new investigations in 2012

The ITC report also addresses investigations initiated by non-practicing entities (NPEs). It cites that some commentators have suggested that NPE filings account for the agency’s increased caseload because of the U.S. Supreme Court’s decision in eBay, Inc. v. MercExchange, LLC, which made injunctions more difficult to obtain in district courts. However, the ITC data does not seem to support this suggestion.

According to the ITC, since the eBay decision on May 15, 2006, it instituted 301 investigations through the first quarter of 2013. Of these, Category 1 NPEs, defined as entities that do not manufacture products that practice the asserted patents and whose business model primarily focuses on purchasing and asserting patents, accounted for 33 (or 11 percent). Category 2 NPEs, defined as all other entities that do not manufacture products that practice the asserted patents, accounted for 27 (or 9 percent).

In that same time period, only four NPEs were successful in obtaining exclusion orders: two Category 1 NPEs and two Category 2 NPEs. In each of these four investigations, the involved NPE or its subsidiary developed the technology at issue in the investigation.

How Can I Help?

If you, or someone you know, need any help with Intellectual Property issues, from filing a patent, trademark or copyright, or just need advice regarding how best to protect your inventions, ideas or your brand, please contact me for a free 30 minute consultation at nvantreeck@usip.com or call TOLL FREE at 1-855-UR IDEAS (1-855-874-3327) and ask for Norman.

– Ex astris, scientia –

I am and avid amateur astronomer and intellectual property attorney in Pasadena, California and I am a Rising Star as rated by Super Lawyers Magazine.  As a former Chief Petty Officer in the U.S. Navy, I am a proud member of the Armed Service Committee of the Los Angeles County Bar Association working to aid all active duty and veterans in our communities. Connect with me on Google +

Norman