Pennsylvania AG Kathleen G. Kane
Pennsylvania’s Attorney General Kathleen G. Kane has called on the Federal Trade Commission (FTC) to investigate so-called “patent trolls.” Patent trolls are companies that acquire broadly worded patents and bring lawsuits, often frivolous, to legitimate business for patent infringement.
According to the Pittsburgh Business Times, a Boston University study estimated a whopping $29 billion tally on patent-trolling cases in 2011. The firms typically own one or more patents, but do not use them in manufacturing, marketing or selling products or services. Instead, they seek revenue from licensing the patent to others or through litigation and settlements after filing suit against firms they alleged infringed on their patents.
Kane, who is a member of the National Association of Attorneys General Working Group on Patent Trolls, has joined 42 other Attorneys General to fight the practice. In a letter signed by Kane, the Attorneys General said “through the issuance of numerous demand letters to their targets (often consumers, non-profits, and small businesses having little, if anything, to do with the underlying patent), [patent trolls] commonly demand license fees or settlements accompanied by the threat of costly litigation if the target does not ‘ pay up.’ These [victims] usually possess little knowledge of patent law and are intimidated by demand letters.”
“Due to the high price of patent lawsuits, these trolls pose an unfair, disproportional threat to small businesses and their innovation, which is the engine of our economy. Victims often pay a fee to trolls rather than go through an expensive court fight,” Attorney General Kane said. “This amounts to silent extortion.”
Kane added that patent trolls do not develop the underlying technology, improve upon it or bring it to market, and seek only to extract costly licensing fees from alleged infringers.
In early October, the FTC announced its plan to conduct a wide-ranging investigation of known patent trolls, also known as patent assertion entities. In addition to the FTC’s action, the federal government is also stepping in to preclude the lawsuits from happening so often – Virginia Congressman Bob Goodlatte (R-VA) introduced a bill (H.R. 3309) in late October called the Innovation Act.
According to IPBrief.net, if passed by the Senate in its current form, the bill will add transparency to patent litigation and will require patent holders to show exactly who would be profiting if a lawsuit was brought. It would also allow lawsuits against customers to settle in certain circumstances, and would require fee shifting to the prevailing party in most patent cases – an amendment that was changed from its original “loser pays” system.
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