Patent trolls have recently become more of a concern in the context of enforcing patents. A patent troll is a person or company who enforces patent rights against accused infringers in an attempt to collect licensing fees, but does not manufacture products or supply services based upon the patents in question. Needless to say, a need has arisen to combat patent trolls’ meritless assertions which are often in bad faith.
To that end, recent proposed legislation in Georgia, House Bill 809, serves to prevent bad faith assertions (BFA) of patent infringement. The legislation is split into two parts – factors that a court may consider as evidence of BFA and factors that a court may consider as evidence that an individual has not made a BFA.
With regard to the first category, here are the factors that can indicate a BFA:
- Prior to sending the demand letter, the plaintiff failed to conduct an analysis comparing the claims in the patent to the product, service, or technology. Or, if an analysis was done, it failed to identify the specific areas that are covered by the claims in the patent.
- The demand letter doesn’t contain the patent number, name and address of patent owner(s) and/or assignee(s), or factual allegations regarding the specific areas that the allegedly infringing product, service, or technology infringes upon the patent, or is covered by the claims in the patent. If omitted and the defendant requests this information and plaintiff still does not provide it within a reasonable period of time, the court may also consider this as a factor.
- The demand letter demands payment of license fee or response within an unreasonably short period of time.
- The plaintiff offers to license the patent for an amount that is not based on a reasonable estimate of the value of the patent.
- The claim or assertion of infringement is meritless and the plaintiff knew, or should have known, that it is meritless.
- The claim or assertion of infringement is deceptive.
- The plaintiff (or its subsidiaries or affiliates) previously filed or threatened to file one or more lawsuits based on the same or similar claim of patent infringement, and those threats or lawsuits lacked the above information, or the individual attempted to enforce the claim of patent infringement in litigation and a court found the claim to be meritless.
With regard to the second category, here are the factors that can indicate there was not a BFA:
- The demand letter contains the above information, or if it does lack the above information and the defendant requests it, the plaintiff provides the information within a reasonable period of time.
- The plaintiff engages in a good faith effort to establish that the defendant has infringed the patent and to negotiate an appropriate remedy.
- The plaintiff makes a substantial investment in the use of the patent or in the production or sale of a product or item covered by the patent.
- The plaintiff is the inventor or joint inventor of the patent, or in the case of a patent filed by and awarded to an assignee of the original inventor or joint inventor, is the original assignee or an institution of higher education or a technology transfer organization owned or affiliated with an institution of higher education.
- The plaintiff has demonstrated good faith business practices in previous efforts to enforce the patent, or a substantially similar patent, or successfully enforced the patent, or a substantially similar patent, through litigation.
The legislation also discusses remedies and enforcement. For the full text of the legislation, click here.
David M. Lilenfeld