Whatever your preferred term for
them – patent-assertion entities, non-practicing
entities, patent-holding companies or just plain trolls
– they’ve been getting it from all
Politicians in Congress spent
much of last year bashing trolls. Now, state politicians are
increasingly getting in on the act. Attorneys general are
falling over each other to take on trolls.
Child pornographers, sexual assaulters, patent
Earlier this month Nebraska’s attorney general Jon
Bruning (right) lumped patent
trolls in with child pornographers and sexual
assaulters when unveiling his targets for
legislation this year. His proposed patent abuse prevention act
would define unlawful patent assertion activity and require any
person sending more than 25 patent assertion letters to notify
the attorney general. This is similar to legislation
that was passed by Vermont’s attorney
general last year. South Carolina’s
attorney general Alan Wilson this week also jumped on the troll bashing bandwagon.
Bigger news came this week when
New York’s attorney general Eric Schneiderman announced a
settlement with MPHJ Technology Investments, seen by
many as the poster child for the patent troll issue.
The settlement requires MPHJ to
allow any licensees that received deceptive letters to void
their licence and prohibits the firm from contacting businesses
it has previously targeted. More significantly, it imposes a
variety of obligations on the firm that Schneiderman said
should serve as guidelines for all patent trolls, including
requiring a good faith effort to determine whether a targeted
business has engaged in an infringement, providing material for
an accused infringer to evaluate a claim, making no misleading
statements about a licence fee, and being transparent about the
true identity of the patent holder.
The heat will likely continue to
be turned up on patent trolls at a state level. For example,
law professor Robin Feldman of the Institute of Innovation Law
at the University of California Hastings College of Law
declared that the New York settlement "provides a model for
other states, and for federal regulators as well".
Trolls may not take it lying
This week – in a move
that was described variously as a "patent
stunner", an "unbelievable
act of chutzpah" or, more soberly, a "bold
lawsuit" – MPHJ sued the Federal Trade
Commission for trying to stop it seeking payouts for patent
infringements. The FTC previously threatened to sue MPHJ for
few are showing support for MPHJ in particular, some are
raising big concerns that attorneys general may go too far and
take too simplistic an approach to patent trolls.
Not all patent-assertion
entities are equal
Patent attorney Gene Quinn on his IPWatchdog blog acknowledged that
it is relatively clear that MPHJ engaged in activities that
earns itself the characterisation of a patent troll. But he
chided New York Attorney General Schneiderman (right) for
his strong language about trolls that suggested it is
condemnable to buy patents and enforce them at all.
rather take a far more nuanced position than did Attorney
General Schneiderman," said Quinn. "Unfortunately, in his
announcement the attorney general goes too far. What he says
means that virtually all patent owners are patent trolls. He
also suggests that engaging in legal, authorised activity under
the patent laws could subject one to investigation, which is
obviously a dangerous precedent; one that is hardly necessary
to justify what appear to be entirely appropriate actions taken
Nebraska attorney general’s approach has drawn
criticism. Bruce Berman, CEO of Brody Berman Associates,
raised fears on the IP CloseUp blog that
lawmakers may not separate the truly heinous from those merely
acting in bad faith.
however, that distinctions between NPEs and patent quality are
not being made, and that legitimate, innovation-enhancing
enforcement is likely to be thrown out with the bath water,"
"Painting bad faith patent enforcers with the same brush
as child pornographers and illicit drug makers is worrisome.
You would hope that someone with good sense would step
up and remind lawmakers that NPEs differ, and that MPHJ is the
(rare) exception, and not the rule."
With states taking more action against abuses, and
Congress likely to pass legislation tackling patent litigation
abuse, the heat is likely to be turned up on trolls throughout