Friday, May 24, 2013

Vermont Declares War on Patent Trolls

Wow! The state of Vermont passed a law, H.299, which will be codified as 9 V.S.A. §§ 4195 - 4199, "Bad Faith Assertions of Patent Infringements."  This seems to be the first state attempt to regulate Patent Trolls. States may actually not have any authority in this area, which may have been completely pre-empted by the federal government.  But the feds have not really stepped in either fully or fast enough to suit everybody.  (see excellent article at Forbes for analysis here) There have been a few federal gestures in this direction:

H.R. 845, the SHIELD Act, Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013. This bill was introduced in Feb., 2013, assigned to the House Judiciary Committee, and has languished there with little chance of success.

S. 866, the Patent Quality Improvement Act.  This bill was just introduced in May, 2013, and assigned to the Senate Judiciary Committee.  It may be moved out of committee, but again has little chance of final passage, according to the analysis at

End Anonymous Patents Act, which seems so newly introduced as not to even have a bill number yet, or to have been yet assigned to a committee. It was introduced by Congressman Ted Deutch in the House.

Back to Vermont.  The Vermont law does not define "Bad Faith" so much as list factors for judges to weigh in determining whether a patent infringement assertion is being brought in good faith or bad.  It does, however, allow attorneys general to bring lawsuits against patent trolls. And the Vermont Attorney General lost no time in doing just that.  The State of Vermont v. MPHJ Technology Investments, LLC, is actually brought primarily under the Vermont Consumer Protection Act, 9 V.S.A. §§ 2451 et seq.  The Attorney General claims the Defendant has engaged in unfair and deceptive acts by sending letters to small non-profit organizations in Vermont threatening them with patent litigation if they do not pay patent license fees.

The complaint asks the judge to award:

1. Permanent prohibition against the Defendant engaging in any business activity in, into or from Vermont that violates Vermont law;

2. Permanent injunction to stop threatening Vermont businesses with patent infringement litigation;

3.  Full restitution to all Vermont businesses who suffered damages due to Defendant's acts;

4. Civil penalties of up to $10,000 for each violation of the Consumer Protection Act;

5.  Award of investigative and litigation costs and fees to the state of Vermont;

6. Such other relief as the Court deems appropriate.

Decorated with the ubiquitous Troll face. (see The Atlantic's article about trolls and Internet subcultures such as Reddit and 4chan where an image such as this Troll face would appear.  Different kind of troll, but just as annoying.)

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