The Patent Troll Assaults Continue … But To What End?

Somewhere, someone must have taken the famous cartoon of Elmer Fudd, in full hunting regalia, and changed the caption to read, “Shhhhhhhhhhh, I’m hunting Twolls.” (After securing the appropriate IP permissions, of course.)

This past fall, we posed the hypothetical question of whether it was open season for patent trolls, euphemistically referred to as non-practicing entities (“NPEs”) or patent assertion entities (“PAEs”), in the wake of the new 35 U.S.C. § 299.

Previously, we had reported that the “Saving High-Tech Innovators From Egregious Legal Disputes Act of 2012,” (or “Shield Act”) was introduced in the House of Representatives, to permit fee-shifting in patent litigations involving computer hardware and software. That legislation was reintroduced and is pending in committee. Other anti-troll legislation is pending as well.

Recently, the assault on patent trolls has continued, on both the federal and state fronts.

Last week, the Patent Abuse Reduction Act was introduced in the U.S. Senate aimed to modernize the U.S. patent system. Among its proposals, the bill would amend “Form 18,” the model patent infringement complaint in the Federal Rules of Civil Procedure, to require patent infringement complaints to include detailed information not currently required. These include identifying each product or feature alleged to infringe the patent, including name or model number; a detailed explanation of how the asserted claim corresponds with the accused function; a description of the plaintiff’s principal business and right to assert the patent; and a list of every other suit in which the patent has been asserted thus far. (As practitioners know, Form 18 currently only requires minimal information, such as a statement that the plaintiff owns the patent and the defendant infringes; Form 18 itself already faces continued scrutiny following the Supreme Court’s heightened pleading standards decisions in Twombly and Iqbal.)

Meanwhile, Vermont’s Attorney General announced last week a lawsuit against a patent troll for violating the state’s consumer protection laws, a case the state said was the first of its kind. The complaint describes the plaintiff’s activities as an unfair and deceptive practice, alleging that it essentially operated an extortion racket. The AG’s suit preceded a new Vermont law amending the State’s consumer protection laws to permit businesses to sue patent owners who allege infringement in bad faith. The new law sets forth certain circumstances of “bad faith assertions,” that would give rise to a cause of action, such as sending a license demand letter that does not detail how the recipient infringes. Accordingly, recipients of bad faith assertions can now sue the patent owner to recover damages under this state law claim.

Time will tell how these various new measures will stand up, particularly the Vermont law and its potential clash with U.S. patent laws. And, as importantly, how these various steps will impact patent troll activity — if at all. Elmer Fudd’s time (still) may not have come.

Ralph A. Dengler, a former Director in the Gibbons Intellectual Property Department; Todd M. Nosher, a former Associate in the Gibbons Intellectual Property Department; and Jillian A. Centanni, a former Associate in the Gibbons Intellectual Property Department, authored this post.
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