A recent Forbes magazine article defined a “patent troll” as, “any person or entity that owns a patent but does not produce the patented product or practice the patented method. Instead, the so-called ‘troll’ exacts a toll, in the form of a license fee, from other persons or entities the ‘troll’ believes infringes (or do infringe) the patent.”
House Resolution 9, also known as The Innovation Act, is currently making its way through the United States House of Representatives. House Judiciary Chairman Bob Goodlatte (R-Va) introduced the bill earlier this year. The primary purpose of this piece of legislation is to stop “patent trolls” from filing needless demand letters and lawsuits.
H.R. 9 borrows largely from an Illinois law passed last August that took effect on January 1, 2015. That legislation, known as Public Act 98-1119 or as 2013 Ill. SB 3405, amended Illinois’ Consumer Fraud and Deceptive Business Practices Act to include provisions against unfair or deceptive patent infringement demand letters.
The Illinois law made it an unlawful practice for any person to send, in connection with the assertion of a United States patent, communication that states the intended recipient has infringed a patent and bears liability if the communication falsely threatens that judicial relief will be sought if compensation is not paid, the communication falsely states that litigation has been filed against the intended recipient, or if the assertions contained in the communication lack a reasonable basis in fact or law.
The assertions lack a reasonable basis in fact or law if the person asserting the patent is not a person, or does not represent a person, with the current right to license the patent to or enforce the patent against the intended recipient; the patent in question has been held to be invalid or unenforceable in a final judicial or administrative decision; or if the activities in question were undertaken after the patent has expired.
Additionally, the content of the communication must include the identity of the person asserting a right to enforce the patent, the identification of the patent issued by the Patent and Trademark Office alleged to have been infringed, and the factual allegations concerning the areas in which the recipient’s products, services, or technology infringed the patent.
The law before Congress essentially sets out many of the same requirements. If enacted, Congress would require more specificity in demand letters and lawsuits, require the losing side to pay both parties’ litigation fees, and require disclosure of all owners of asserted patents.
Also under the proposed federal law, users and purchasers of alleged infringing products would be protected from suit unless the manufacturer had first been sued or if the manufacturer agreed to assume defense of the suit.
At Wentzel Law Offices, we have extensive experience successfully representing both individuals and companies in cases involving violations of the Consumer Fraud and Deceptive Business Practices Act. If you or your company has received a demand letter, give us a call at (312) 697-0500 to schedule a consultation.