2014 looking like a bad year to be a patent troll
Managing IP is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

2014 looking like a bad year to be a patent troll

Patent trolls came under a lot of fire near the end of last year, as the US House of Representatives debated the Innovation Act and the Senate readied its own legislation to tackle patent abuse. The focus on patent trolls has intensified further so far this year

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 sides.

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 trolls... 

jon-bruning-nebraska20attorney20general.jpg

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 down, however.

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 unfair competition.

Not all patent-assertion entities are equal 

attorny-general-eric-t-schneiderman.jpg

While 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.

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.

“I’d 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 against MPHJ.”

Similarly, 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.

“I fear, 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,” said Berman.

“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 this year.

more from across site and ros bottom lb

More from across our site

The firm was among multiple winners at a record-breaking 2024 ceremony held in London on April 11
We provide a rundown of Managing IP’s news and analysis from the week, and review what’s been happening elsewhere in IP
The Americas research cycle has commenced. Do not miss this opportunity to nominate your work!
Increased and new patent fees could affect prosecution strategies for law firms and companies, according to sources
Five former Oblon lawyers felt that joining Merchant & Gould would help them offer the right prices to entice clients
The UK may not be a UPC member but its firms are still acting in proceedings, with Carpmaels among the most prominent
Naomi Pearce of Pearce IP shares how she is helping her firm become a life sciences leader and how generous policies have helped attract top talent
The Court of Appeal has dismissed an appeal filed by Ocado, in what was a key test for transparency at the new court
Each week Managing IP speaks to a different IP lawyer or professional about their life and career
INTA is calling out ‘immoral’ unregistered attendees at the association’s annual meeting, but the debate is more nuanced
Gift this article