When it comes to patent trolling, that is, entities who hold broad patents going after companies for “infringing” these patents and demanding exorbitant amounts of cash, some states are taking the law into their own hands. That is, their legislatures are passing state laws.
Last year Vermont enacted a anti-patent troll law, generally considered to be the first of its kind. Its aim was to describe the kinds of actions patent trolls generally take and preempt the kind of damage they incur. The blog Patently-O explained Vermont’s legislation:
The law creates a factor-based test for courts to determine when acts constitute “bad faith assertions,” and lists several non-exhaustive factors that courts may consider as evidence of bad faith, including sending demand letters that lack basic information about the infringement claim or that seek payment of unreasonable royalty fees. Targets of bad faith assertions can bring actions (in state or federal district court1) to obtain compensatory damages and exemplary damages, plus costs and fees.
In other words, the law is meant to enumerate what kind of actions patent trolls take. If someone is found to be doing that, they can be sued for the damages they caused.
Other states are following suit, the most recent: Kentucky. Entrepreneurs and lawmakers alike have joined forces to propose an anti-patent trolling law that is not dissimilar from Vermont’s. Yesterday the Kentucky Senate Judiciary Committee held a hearing and heard testimony.
Drew Curtis of the news aggregator Fark.com and Sidney VanNess of the Kentucky company On Call Central both offered testimony. Afterward I chatted with VanNess, and he told me the committee appeared completely on board with the proposed law.
“It looked like a no-brainer,” he said.
And he was right. The committee voted in favor of the bill.
VanNess, an entrepreneur behind a new medical answering service for physicians, is aware and fearful of havoc patent trolls wreak. “I’ve not actually been sued yet,” he said, but, “we’ve had some threatening communications with patent trolls.”
He sees trolls’ actions as detrimental to any small business trying to get off the ground. “When you’re a young company, you’re in a fragile state,” he said. “You don’t have a budget for frivolous lawsuits.”
Curtis, on the other hand, has dealt firsthand with patent trolls. A few years back, he got sued by a one and instead of standing idly by and settle, he resolved to fight back. And, miraculously, he won, and didn’t have to fork over a dime. At the same time, his story is very unique and he’s able to tell it — most people who settle with patent trolls must sign nondisclosures; he did not have to. So, given his circumstances, Curtis is trying to use his story as a way to halt this kind of troll action from happening again.
There is a movement on the federal level to get the ball rolling for anti-patent troll legislation. But, given the usual lobbying rigamarole, for such a sweeping act to pass through Congress and signed into law takes time and endless energy. And with the dysfunctional government we have, highly unlikely. States, however, can act themselves and perhaps achieve better results.
According to VanNess 11 states are “taking some form of action independently of the federal government.” He hopes Kentucky will be the latest with a full-on bill that protects businesses from the effects of patent trolling.
The Kentucky law still has some ways to go. “We’ve got to get a sponsor on the house side,” VanNess said. Once it gets through the legislature, assuming it passes, the Governor must sign it into law. But all these are hurdles yet to be crossed.
VanNess is optimistic, but has a jaundiced eye with regards to the political process. At any time during the proposing of a law, there can be an impasse. But he sees a bright future for this bill.
And if the Kentucky law does pass, perhaps it could spur some more action on the federal level. Or, at the very least, cause more states to take up the fight.
[Image via Wikimedia]