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

Microsoft supports End Anonymous Patents Act

In a strange twist, Microsoft has thrown its support for a recently introduced bill titled “End Anonymous Patents Act,” introduced by House of Representatives member Ted Deutch (D-Fla.)

The act, if passed, would supposedly solve a problem regarding the recordation of patents in the U.S. Patent and Trademark Office.  Currently, recording the owner of a patent is voluntary.

Microsoft’s general counsel stated that:

Some patent owners take advantage of this obscurity to try to hide what they own for tactical advantage in licensing negotiations or to avoid complying with patent licensing commitments.

This is rather ironic considering that Microsoft has used anonymous patents for years to threaten both the Open Source community and now anyone producing an Android device.

To show it is serious, Microsoft launched its own web based Patent Tracker that allows anyone to quickly view and search through all of the patents that the company currently holds.

However, Microsoft has refused to divulge what patents it owns that “scare” handset makers in to licensing Microsoft’s portfolio, or those patents that it has licensed to other companies.

Currently, Microsoft makes more money from patent licenses on Android phones that it has made in total for its own brand of phones.  They are in fact becoming one of the world’s largest patent licensing entities, and in many cases, a non-practicing entity (or patent troll by some definitions).

This apparent transparency about face, is nothing more that smoke and mirrors, and is not the solution to the problem.

In fact, Microsoft can easily skirt the new bill by transferring their patents to patent assertion entities (i.e trolls) to attack their competitors.

Microsoft has strong ties with Intellectual Ventures, Rockstar and MOSAID, three of the world’s largest patent trolls.  When Microsoft transfers its patents to these trolls, Microsoft is no longer identified as the  “owner” of the patent.  So the recordation required by the new law does nothing to protect other companies from a shakedown and does not list Microsoft as the recorded owner.  Very convenient.

For example, Microsoft transferred more than 2,000 wireless patents from Nokia to MOSAID in 2011. Microsoft’s new “transparent” patent trackinging software will not show these patents because they don’t technically own the patents or control MOSAID.  However, Microsoft will benefit from the transfer because they and Nokia still maintain the ability to reclaim control over the patents transferred if MOSAID fails to satisfy preset revenue targets.

But don’t think Microsoft is alone in this endeavor.  In a similar fashion, Rockstar Consortium, Inc,formed by Microsoft, Apple, Ericsson and others, is now one of the largest patent trolls in the world, with more than 4,000 patents acquired the collapse and bankruptcy of Nortel.

A better bill to put before Congress would require companies to disclosure not only patent ownership, but patent royalties recieved from a particular patent (i.e. A companies patent “interest”) and a stiff penalties to companies that participate in patent privateering.  But with all the large companies that have become patent trolls themselves (while crying about the bad effects that patent trolls have on the economy), there isn’t any real change on the horizon.

How Can I Help?

If you need help to patent an idea, or protect  yourself from a claim of patent infringement, or know someone that can use my help, 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. 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