Vermont passes controversial new law targeting patent trolls
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Vermont passes controversial new law targeting patent trolls

Vermont enacted a new law on Wednesday, believed to be the first of its kind in the US, in an effort to crack down on so-called patent trolls

The legislation, known as Bad Faith Assertions of Patent Infringements, was signed into law by Vermont Governor Peter Shumlin. It is unclear whether states have the authority to regulate patent activity, due to federal preemption doctrines.

The law allows parties who are threatened by trolls to sue for damages, even if the patent owner has filed no lawsuit against them.

It also enables the state’s Attorney General to pursue civil enforcement against parties believed to be asserting patents in bad faith.

In addition, the patent owner can be required to post a bond of up to $250,000 under the new law, to cover any attorneys’ fees a court may later award to an alleged infringer. The court can deny the bond if the defendant lacks “available assets” equivalent to the amount of the bond.

Rather than define bad faith assertions, the law lists factors to help judges separate legitimate claims from illegitimate ones.

Under the new law, factors that might lead a court to conclude that a claim is illegitimate would include:

  • Not identifying the patents in question, who owns the patent, and to precisely how the patent has been infringed;

  • Demanding an unreasonable amount of money, and/or demanding payment in an unreasonably short amount of time;

  • Making “deceptive” or “meritless” claims.

Factors that might lead a court to conclude that a claim is legitimate include:

  • The claim being made by the original inventor, an educational institution or someone who has commercialised the invention;

  • Having demonstrated “good faith business practices” in previous efforts to enforce the patent, or one that is “substantially similar”

  • Previous success in enforcing the patent through litigation.

The law also grants courts leeway to consider any other factors they believe to be relevant.

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