Washington passes a Patent Troll Prevention Act
In December, 2015, the Washington legislature approved a Patent Troll Prevention Act. The statute prohibits baseless demand letters, and allows the state Attorney General to enforce the statute under Washington’s Consumer Protection Act.
Oregon enacts statute to make improper patent license demands a violation of its unlawful trade practices law
In March, 2013, Senate Bill 1540 was signed into law by the governor of Oregon. The law makes patent trolling a violation of the Oregon’s Unlawful Trade Practices Act, and allows an individual or business targeted by a patent troll to sue and recover attorneys’ fees.
The statute makes it a violation of the Unlawful Trade Practices Act to send a letter demanding that someone license a patent without identifying the patent or explaining why the recipient infringes. It is also a violation to demand payment of a patent licensing fee within an "unreasonably short" period of time. The statute also allows state Department of Justice attorneys and the attorney general to investigate whether the accusing entity has acted in bad faith.
California adopts legislation urging the President and Congress to reduce abusive and frivolous patent litigation; and introduces bill against bad faith patent enforcement
In October, 2013, California legislators first began meeting to discuss the effect that patent trolls are having on California businesses. In July, 2015, the California legislature adopted Assembly Joint Resolution Number 9, which is a measure which urges the President and the Congress of the United States to “craft a balanced and workable approach to reduce incentives for and minimize unnecessary patent litigation while ensuring that legitimate patent enforcement rights are protected and maintained.
In February, 2015, the California Senate introduced S.B. 681, a bill that would make it unlawful to send a written communication that states or represents that the recipient may have infringed a United States patent if the sender, in bad faith, makes specified statements, seeks compensation for specified conduct, or fails to include specified information in the communication. The violation of the stature would only be enforceable by the state attorney general. The bill appears to pending in the Senate Judiciary Committee.
Arizona introduces statute prohibiting bad faith patent infringement allegations
In January, 2016, Arizona introduced HB 2386, the “Patent Troll Prevention Act,” which would prohibit patent infringement allegations made in bad faith. It would allow the state attorney general to investigate and enforce violations using consumer fraud statutes. The statute passed the Arizona House of Representatives and has been passed on to the Arizona Senate.
Colorado adopts statute punishing bad faith patent assertion
In June, 2015, the Colorado legislature passed HB 1063, which gives the state Attorney General’s Office enforcement authority to prosecute bad faith patent enforcement demands.
Idaho passes bill making it unlawful to assert patent infringement in bad faith
In March, 2014, Idaho approved Bill 1354, which made it unlawful to assert patent infringement in bad faith.
Montana adopts anti patent trolling legislation
In April, 2015, Montana approved SB 39, prohibiting bad faith assertions of patent infringement, allowing the state attorney general to enforce the statute through civil investigation and actions, and allowing for private civil causes of action, punitive damages, and attorneys’ fees.
Utah passes Distribution of Bad Faith Patent Infringement Letters Act
In April, 2014, effective May, 2014, Utah enacted a statute that prohibits the distribution of bad faith demand letters asserting patent infringement. The statute allows a person who has been the recipient of a demand letter asserting patent infringement to file an action, provides remedies, and allows forpunitive damages.
Wyoming introduces bill against patent trolling
In February, 2016, Wyoming introduced a bill prohibiting bad faith assertion of patent infringement. The statute allows for a private cause of action, including exemplary damages, as well as enforcement by the state attorney general. The bill has passed the Wyoming Senate, and is pending in the Wyoming House of Representatives.
North Dakota approves legislation barring bad faith assertions of patent infringement
In March, 2015, North Dakota approved HB 1163, which prohibits bad faith assertions of patent infringement. It creates a list of factors that the courts may consider in determining whether an assertion is made in bad faith. It allows for a private cause of action, and also allows the state attorney general to enforce the statute. It also provides that a variety of entities are exempt from the statute, including institutions of higher education, and publicly traded companies, among others.
South Dakota passes legislative ban on bad faith assertions of patent infringement
In March, 2014, South Dakota approved Senate Bill 143, effective July, 2014, making it unlawful to assert patent infringement in bad-faith. The statute authorizes the state attorney general to investigate and bring civil actions for bad faith assertions, and also allows for private causes of action.
Minnesota reaches settlement agreement with patent troll; and introduces bad faith patent assertion legislation
In August, 2013, after initiating an investigation, Minnesota Attorney General Lori Swanson became the first state Attorney General to reach a settlement agreement with a patent troll. The agreement required the troll, MPHJ (the “scanner troll”) to give the attorney general's office 60 days' notice and obtain its consent before it sends any letters targeting Minnesota businesses.
In March, 2015, the Minnesota state Senate and House of Representatives introduced bills that would prohibit bad faith assertions of patent infringement authorize the courts to consider various factors in determining whether an assertion of patent infringement in bad faith or good faith has been made. Those bills have been referred to the Senate Commerce Committee (SF 1321) and the House Commerce and House Regulatory Reform Committee (HF 1586), respectively. Iowa introduces legislation on bad-faith assertions of patent infringement In January, 2015, the Iowa legislature introduced a bill, Senate Study Bill 1028, that would create a private right of action for bad-faith assertions of patent infringement, and provide remedies and penalties. Thus far, that bill has not yet been approved.
Nebraska Attorney General investigates patent troll; and introduces legislation to make baseless claims of patent infringement
In July, 2013, Attorney General Jon Bruning initiated an investigation into the business and patent enforcement activities of Farney Daniels, based on the state’s belief that letters sent by Farney Daniels to Nebraska businesses violated the state’s unfair competition law. The investigation was based on both the state Consumer Protection Act and the Uniform Deceptive Trade Practices Act. As part of the investigation, the Attorney General issued a cease and desist order against Farney Daniels. Farney Daniels responded by adding members of the Nebraska Attorney General’s Office as parties to a patent lawsuit brought on behalf of Activision TV in federal court. On September 30, the federal judge presiding in that case held that the cease and desist order violated the constitutional rights of Activision TV and enjoined its enforcement. The Attorney General appealed that decision to the US Court of Appeals for the Eight Circuit, but voluntarily withdrew his appeal in November, 2013.
In January, 2014, Bruning proposed a bill in the Nebraska state legislature that would make it a crime to allege patent infringement in bad faith. The Nebraska Patent Abuse Prevention Act, which was introduced by state Senator Heath Mello at Bruning's request, would make it a violation of Nebraska's existing state consumer protection law to send letters making baseless allegations of patent infringement. The bill sets out numerous criteria for courts to consider as evidence that a patent infringement allegation was made in bad faith. The factors include sending a demand letter that does not identify the patent owner or patent number and does not provide factual allegations about how the recipient infringes. In addition, demanding a license fee "within an unreasonably short period of time" or offering to license the patent for an amount that is "not based on a reasonable estimate of the value of the license," would count as bad faith under the bill, as would making an infringement allegation the patentee knew or should have known was meritless. As of the end of 2014, the legislation was still pending.
Missouri Attorney General announces investigation of impact of patent trolls on Missouri businesses; passes statute prohibiting bad faith assertions of patent infringement
In November, 2013, Attorney General Chris Koster announced that he is actively engaged in investigating the impact of trolls on Missouri businesses.
In July, 2014, the Missouri legislature passed Bill 706, prohibiting the bad-faith assertion of patent infringement, effective August, 2014. The statute specifies certain factors as examples of bad-faith, such as: (1) the demand letter’s not identifying the patent number, name and address of the patent owner, or factual allegations concerning the specific areas in which the target infringes; (2) the person offers to license the patent for an amount that is not based on a reasonable estimate of the value of the license; or (3) the demand letter requires payment of a license fee or response within an unreasonably short period of time. The statute also authorizes the state attorney general to investigate bad faith assertion, and prosecute it as a civil action under the Missouri antitrust law. In addition, the statute provides for a civil cause of action for targets of bad faith assertions.
Kansas approves legislation on bad-faith assertions of patent infringement
In May, 2015, Kansas approved legislation amending the Kansas Consumer Protection Act, allowing a civil cause of action for persons against whom a bad-faith assertion of patent infringement has been made. It also allows the state attorney general to investigate and bring an action for bad-faith assertion of patent.
Oklahoma Governor passes signs legislation protecting against bad-faith patent infringement claims
In May, 2014, the Governor of Oklahoma signed HB 2837, effective October 2014, protecting businesses from abusive and bad-faith assertions of patent infringement. The measure prohibits bad faith patent infringement claims, and lists the factors a court may consider as evidence of a valid claim.
Texas passes law prohibiting demand letters alleging a claim of patent infringement in bad faith
Texas SB 1457, which became Sections 17.951 to 17.955 of the Texas Business and Commerce Code, effective September 1, 2015, defines bad faith claims of patent infringement as communications that falsely state that the sender has filed a lawsuit in connection with the claim, or make a claim that is objectively baseless, and are likely to materially mislead a recipient because of the communications. In addition, the Texas statute provides that a claim is objectively baseless when the sender, or the person represented by the sender, lacks current patent licensing or enforcement rights, the patent at issue has been held invalid or unenforceable, or when all of the allegedly infringing activity occurred after the patent at issue expired. In addition, a demand letter is materially misleading when it lacks material information regarding who is asserting the claim, the patent allegedly infringed and the product, service or technology that is allegedly infringing the patent.
The statute also allows the Texas Attorney General to bring an action on behalf of the state seeking a civil penalty for bad faith patent assertions, including injunctions and up to US $50,000 for each violation, as well as seek reimbursement for the cost of investigation and prosecution. Although the statute provides no private cause of action, the Attorney General can seek restitution for a victim's legal and professional expenses related to the bad faith infringement claim.
Louisiana passes statute prohibiting bad-faith assertions of patent infringement
In May, 2014, Louisiana passed a statute, LA Rev Stat § 51:1428, providing that no person shall make a bad faith assertion of patent infringement against an end-user. The statute is an amendment to the state unfair or deceptive trade practice act, and provides that the state attorney general shall have the sole authority to investigate and pursue any violation of the statute.
Mississippi passes bad faith assertion legislation
In 2015, the Mississippi House of Representative passed HB 589, which made it unlawful to send bad faith patent assertions. It exempts institutions of higher learning. The statute also authorizes the state attorney to investigate and institute civil actions to enforce the statute.
In 2015, trolls were responsible for 66% of all infringement claims filed in the US courts, according to a report by Unified Patents. (2015 Annual Year End Patent Dispute Report, Unified Patents)
