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Patent Trolling Legislation

Patent Trolling Legislation

8/14/2014

Beware of Trolls!

Patent Trolling“Patent trolling” is the process of filing a claim of patent infringement against an entity, despite the fact that the claimant does not manufacture or supply the product or service in question. Patent trolls often file claims in bad faith, hoping that the company being sued decides to settle in order to avoid expensive litigation costs. 

While patent law is traditionally a federal issue, in May 2013, Vermont became the first state to pass legislation to attempt to halt patent trolling.  Vermont’s statute allows victims of patent trolling to sue in state court if the claim was made in bad faith. If the countersuit is successful, the patent troll has to pay court costs and fees accrued by the victim in addition to other damages.  Since the passage of Vermont’s bill, sixteen other states have passed similar legislation.

 

PLEASE NOTE: The summaries should be used for general informational purposes and not as a legal reference. NCSL is unable to answer questions or provide guidance to citizens or businesses regarding patent laws and practices. If you have questions regarding the application of a state law to a specific patent infringement letter, please contact the Office of the Attorney General in your state.

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States     Legislation Summary  
Alabama
SB 121

Signed by GOVERNOR 4/2/2014; Act No. 2014 218

Prohibits a person from asserting a claim of patent infringement in bad faith; authorizes the Attorney General to investigate claims and file enforcement actions; authorizes targets of patent infringement assertions in bad faith to file suit in circuit court for damages; provides for exemplary damages; provides factors for consideration by the court when determining whether a patent infringement assertion was made in bad faith; provides for criminal penalties.

Connecticut
SB 258

Concerns bad faith claims or assertions of patent infringement; provides judicial relief to persons who are the targets of bad faith claims or assertions of patent infringement.

Georgia
HB 809

Signed by GOVERNOR 4/15/2014; Act No. 513

Prohibits bad faith assertions of patent infringement; provides for definitions; provides for factors for determining whether a bad faith assertion of patent infringement has been made; requires the posting of a bond when a bad faith claim of patent infringement has been made; provides for enforcement; provides for damages; provides for related matters; repeals conflicting laws.

Idaho
SB 1354

Signed by GOVERNOR 3/26/2014; Chapter No. 277

Provides that it is unlawful to make bad faith assertions of patent infringement; relates to personal jurisdiction; grants authority to the Attorney General and district courts; provides a private cause of action, remedies and damages and a limitation of action; establishes provisions relating to bond; provides for severability.

Kansas
HB 2663

Relates to bad faith assertions of patent infringement.

Kentucky

SB 116

Establishes a bad faith assertion of patent infringement as a violation of the consumer protection chapter; authorizes the utilization of the remedies available for those violations in addition to private remedies established in this legislation.

Louisiana

HB 564

Makes it an unfair trade practice to engage in bad faith assertions of patent infringement.

Louisiana

SB 255

STATUS: Signed by GOVERNOR 5/28/2014; Act No. 297

Provides relative to Unfair Trade Practices and Consumer Protection Law; provides that no person shall make a bad faith assertion of patent infringement against an end user; provides for unfair and deceptive trade practices; provides that any person who is found liable shall be liable to the attorney general for all costs, expenses and fees related to investigations and proceedings associated with the violation, including attorney fees.
Maine SB 654

STATUS: Signed by GOVERNOR 4/14/2014; Public Law No. 543

Authorizes a person against whom a bad faith assertion of patent infringement has been made to bring a civil action in Superior Court for equitable relief, damages, court costs and fees and punitive damages; authorizes the Attorney General to bring an action; provides that a bad faith assertion of patent infringement is a violation of the Maine Unfair Trade Practices Act; provides for a bond requirement.

Maryland
 

HB 430

Provides that a person may not make an assertion of patent infringement against another in bad faith; authorizes a court to consider whether a person made an such assertion in bad or good faith; provides the Attorney General and the Division of Consumer Protection of the Office of the Attorney General have the same authority to take action; authorizes the bringing of a civil action to recover injuries and losses sustained as a result of a violation of these provisions; authorizes the awarding of damages.

Maryland SB 585

STATUS: Signed by Governor; 5/5/2014; Chapter No. 307

Provides that a person may not make an assertion of patent infringement against another in bad faith; authorizes a court to consider whether a person made an such assertion in bad or good faith; provides the Attorney General and the Division of Consumer Protection of the Office of the Attorney General have the same authority to take action; authorizes the bringing of a civil action to recover injuries and losses sustained as a result of a violation of these provisions; authorizes the awarding of damages.

Michigan
HB 5701

Prohibits and provides remedies for claims of patent infringement made in bad faith..

Mississippi
HB 521

Prohibits bad faith assertions of patent infringement; makes certain legislative findings; defines certain terms; provides factors that the court may consider in determining whether a bad faith assertion of patent infringement has been made; provides procedures for actions under this act; provides for a demand letter in an action; requires the posting of bond; provides for enforcement, remedies and damages.

Mississippi HB 1074

Prohibits bad faith assertions of patent infringement; makes certain legislative findings; defines certain terms; provides factors that the court may consider in determining whether a bad faith assertion of patent infringement has been made; provides procedures for actions under this act; provides for a demand letter in an action; requires the posting of bond; provides for enforcement, remedies and damages.

Missouri
HB 1374

Prohibits a person from making a bad faith assertion of patent infringement, lists evidence the court may consider; provides remedies the court may award; provides to recover actual monetary loss from such a violation or violations, or, to receive ten thousand dollars in damages for each such violation, the attorney general's authority will investigate, restrain, and prosecute civil actions under the Missouri antitrust law shall apply to investigating and prosecuting actions.

Missouri SB 706

STATUS: Signed by GOVERNOR; 7/8/2014.

Prohibits bad faith assertions of patent infringement; creates factors that a court should consider when determining if a person has made such an assertion; allows the Attorney General to investigate, restrain, and prosecute such assertion claims; provides that any monetary awards from such action shall be credited to the Antitrust Revolving Fund to pay for such actions.

Nebraska
LB 677

Adopts the Nebraska Patent Abuse Prevention Act.

Nebraska LR 534

Allows for an interim study to examine issues surrounding patent assertion entities, commonly referred to as patent trolls.

New Hampshire
SB 303

STATUS: Signed by GOVERNOR 7/11/2014; Chapter No. 2014-197

Prohibits a person from making bad faith assertions of patent infringement; establishes a private right of action for violations and provides for enforcement by the Attorney General.

New Jersey
 

AB 2462

Prohibits bad faith assertion of patent infringement.

New Jersey SB 1563

Prohibits bad faith assertion of patent infringement.

North Carolina HB 1032

Prevents the abusive use of patents; provides that the attorney general shall provide aid in investigating bad faith infringement claims.

North Carolina SB 648

STATUS: Signed by GOVERNOR 8/6/2014; Session Law Number 2014-110

Creates transparency in contracts between the attorney general and private attorneys; provides that a state agency may not enter into a contingency fee contract with a private attorney unless the Attorney General makes a written determination that contingency fee representation is both cost-effective and in the public interest; provides that the Attorney General shall request proposals from private attorneys and draft a written request for proposals when such a determination is made.

Part II of the bill makes a bad faith assertion of patent infringement an unfair and deceptive trade practice.

Ohio
HB 573

Prohibits a person from making a bad faith assertion of patent infringement; permits a person aggrieved by a bad faith assertion of patent infringement to bring a tort action; authorizes the Attorney General to investigate and to institute a civil action if the Attorney General believes a person has made a bad faith assertion of patent infringement.

Oklahoma
HB 2837

STATUS: Approved by Governor 5/16/2014; Chapter No. 305

Relates to patent infringement; prohibits a person from sending any written or electronic communication that states that the intended recipient or any affiliated person is infringing or has infringed a patent and bears liability or owes compensation to another person if the communication falsely states that the litigation has been filed or the assertions lack a reasonable basis in fact or law; provides that a court may award a plaintiff damages, costs and fees, and punitive damages of a specified amount.

Oregon

SB 1540
STATUS: Signed by Governor 3/3/2014; Chapter No. 19

Prohibits a person or person's affiliate from communicating a demand to recipient if in demand person or affiliate alleges, asserts or claims in bad faith that recipient has infringed or contributed to infringing patent or rights that patentee, assignee or licensee has under patent; permits a prosecuting attorney to make a finding as to whether such person or affiliate has acted in bad faith and to serve investigative demand or take enforcement action against person for engaging in unlawful practice.

Pennsylvania

SB 1222

Prohibits bad faith assertions of patent infringement; confers powers and imposing duties on the Attorney General; imposes penalties.

Rhode Island
SB 2822

Authorizes the attorney general and persons aggrieved to file a bad faith patent infringement suit in superior court seeking equitable or monetary relief from persons filing frivolous patent infringement claims as well as costs, fees, reasonable attorney's fees and punitive damages of a specified amount.

South Carolina
HB 4371

Provides that no person in this state, in regard to patent ownership and potential patent infringement, may intentionally interfere with the existing or prospective contractual relations of another person; provides that a person aggrieved by another person's intentional interference with his existing contractual relations or with his prospective contractual relations has a cause of action in both instances against that person; includes fraud; provides for damages.

South Carolina HB 4629

Provides that it is an unlawful trade practice for a person or entity to make a bad faith assertion of patent infringement; provides evidential considerations; provides remedies.

South Carolina SB 1121

Relates to unlawful trade practices; provides that bad faith assertions of patent infringement are unlawful trade practices; provides for the factors that a court may consider when making a bad faith determination; provides for consideration by the court.

South Dakota

SB 143
STATUS: Signed by GOVERNOR; 3/26/2014.

Provides for a civil remedy for a bad faith assertion of patent infringement.

Tennessee HB 2117 Relates to Remedies and Special Proceedings; creates a cause of action against any person who makes a bad faith assertion of patent infringement.
Tennessee

SB 1967

STATUS: Public Chaptered 5/15/2014; Chapter No. 879

Relates to Remedies and Special Proceedings; creates a cause of action against any person who makes a bad faith assertion of patent infringement.
Utah

HB 117

STATUS: Chaptered 4/7/2014; Chapter No. 310.

Creates a cause of action for the distribution of bad faith demand letters asserting patent infringement; prohibits the distribution of bad faith demand letters asserting patent infringement; allows a person who has been the recipient of a demand letter asserting patent infringement to file an action; allows the court to require the filing of a bond to cover costs of the action; provides remedies; sets limits on punitive damages.
Vermont

HB 299

STATUS: Signed by GOVERNOR 5/22/2013; Act No. 0044

Authorizes an award of liquidated damages to a consumer for a delay in removing a propane tank by a seller upon the disconnection of service; prohibits transmission of an unsolicited bill or demand for payment; increase the penalty for failure to comply with consumer protective civil investigations; reorganizes provisions of the Consumer Protection Act.

Section 6 addresses bad faith assertions of patent infringement.

Vermont

SB 7

STATUS: Signed by GOVERNOR 5/24/2013; Act No. 0047

Creates the Social Networking Privacy Protection Study Committee to study the issue of prohibiting employers from requiring employees or applicants for employment to disclose a means of accessing the employee's or applicant's social network account; sets forth provisions concerning patent infringement; prohibits persons from making bad faith assertions of patent infringement; specifies factors that a court may consider as evidence of a violation; provides for civil actions and related damages.

Section 2 addresses bad faith assertions of patent infringement.

Virginia HB 12 Prohibits any person from making in bad faith an assertion, claim, or allegation that a resident of the Commonwealth is infringing a patent; creates a cause of action for damages and an injunction against a person threatening to bring legal action for alleged patent infringement; provides a bonding requirement.
Virginia

HB 375

STATUS: Signed by GOVERNOR 5/23/2014; Acts of Assembly Chapter No. 810.

Relates to patent infringement; relates to assertions made in bad faith; prohibits any person from making in bad faith an assertion, allegation, or claim that a resident of the Commonwealth is infringing a patent; provides that the enforcement of these provisions are to be exercised solely by the Attorney General or an attorney for the Commonwealth; provides that these provisions do not create a private right of action.
Virginia SB 150
STATUS: Signed by GOVERNOR 5/23/2014; Acts of Assembly Chapter No. 819.
Relates to patent infringement assertions made in bad faith; prohibits any person from making a bad faith assertion, allegation, or claim that a resident is infringing a patent; creates a cause of action for damages and an injunction against a person threatening to bring legal action for alleged patent infringement; provides bonding requirements; provides that any person outside the Commonwealth asserting patent infringement shall be deemed to be conducting business within the Commonwealth.
Wisconsin AB 656 Relates to notifications concerning the assertion of rights under a patent or pending patent; provides a penalty.
Wisconsin

SB 498

STATUS: Signed by GOVERNOR 4/23/2014; Act No. 339

Relates to notifications concerning the assertion of rights under a patent or pending patent; provides a penalty.

Jonathan Griffin is a policy specialist for NCSL that specializes in intellectual property issues.  You can contact him at jonathan.griffin@ncsl.org.
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