42 attorneys general ask senators to address "patent trolls"
(DES MOINES, Iowa) Attorney General Tom Miller today urged leaders of two U.S. Senate committees to enact patent reform legislation that addresses those who try to profit from innovations they had no hand in creating, commonly known as patent trolls.
Miller and a bipartisan group of 41 state attorneys general submitted a letter to the ranking members of the Senate Judiciary and Commerce, Science and Transportation Committees, voicing support for federal legislation to address patent trolls.
“Patent trolls use threats or file abusive litigation to extract money from Iowa businesses, non-profits and sometimes even from consumers who did absolutely nothing wrong,” Miller said. “For those with limited funds to defend themselves, patent trolls can pose a real threat. Instead of focusing on growing their businesses, business owners targeted by patent trolls must focus on abusive litigation.”
Miller noted that Iowa businesses have complained to the Consumer Protection Division about alleged patent trolls.
Patent trolls, also called patent assertion entities (PAEs), acquire patents solely for the purpose of using them to extract license fees and settlements from those they target as alleged infringers. They target businesses, non-profit agencies, and consumers who purchased or used products with a wide-range of patented technology such as printers, scanners, wireless routers and other products commonly used in businesses and homes.
The patent troll business model works because defending patent infringement lawsuits is expensive, particularly for small businesses. A company accused of patent infringement can easily spend thousands of dollars just getting preliminary legal advice about the scope of the patent and its validity. Successfully defending a lawsuit may cost a million dollars or more.
Though patent laws make some provision for awarding attorneys’ fees, a party that defeats a patent troll in court has little hope of getting its money back. Patent trolls generally operate through undercapitalized shell companies that are effectively judgment-proof. Targets of patent trolls often pay several thousand dollars to settle claims of patent infringement – however dubious – instead of risking an expensive legal battle.
The Senate Bill, S.1720 (Patent Transparency and Improvements Act of 2013) , and the related H.R. 3309 (Innovation Act), which recently passed the House, would require greater clarity in patent demand letters and include patent litigation reforms that will help limit the power of patent trolls.
Miller and state attorneys general urged that any legislation confirm existing state authority to protect its citizens from patent trolls. Recently, several states have taken action against patent trolls whose activities run afoul of state consumer protection and unfair trade practice laws.
The letter was sent to Senators Patrick Leahy (D-VT), Charles Grassley (R-IA), John D. Rockefeller IV (D-WV) and John Thune (R-SD), and copied to Senate Majority Leader Harry Reid (D-UT) and Minority Leader Mitch McConnell (R-KY).
Last year in a letter submitted by Miller and 42 state attorneys general, the attorneys general commended the Federal Trade Commission for expanding its efforts to investigate patent trolls.