Sad times for IP trolls — a multi-front war on NPEs has begun


It’s been a sad time for trolls lately.

As we reported here yesterday, a U.S. Congressman has introduced proposed legislation to combat patent trolls, AKA non-practising entities (“NPEs”), from hiding behind multiple layers of shell corporations that, in turn, own the patents-in-issue outright or are exclusive licencees thereof.

That’s not all the trolls’ worries, however.  In Europe, the European Commission recently issued a public tender notice, calling for a study on “the Changing Role of Intellectual Property in the Semiconductor Industry

Call for tenders: The European Commission will launch soon a call for tenders for a service contract of a maximum value of EUR 60 000.

The purpose of this call for tenders is a study which will firstly focus on the expected changes in IP strategies and patenting practises of the semi-conductor industry due to the concentration/specialisation, the emergence of foundries and fabless, technological developments in the sector and the appearance of non-practising entities (NPE). Secondly the study will focus on the effects these developments will have for the further development of the global semiconductor sector in general and the European clusters in particular.

That’s not good troll news, as any two-front war (here, EU and U.S.) is exponentially harder to win than one with a single enemy.  (Ask the Germans, they know.)

“But wait, there’s more!”

If the proud northern state of Vermont can be counted as a “third [and potentially fourth] front,” it just earned that right in the war on patent trolls: the state’s Attorney General stated on 22 May 2013 that Vermont had sued an NPE troll for violating the VT consumer protection laws, a “groundbreaking” one-of-a-kind suit for the state (indeed, for any state to date.  More to come, I’m sure…).

Attorney General Bill Sorrell issued the following press release:

Vermont Attorney General Sues “Patent Troll” in Groundbreaking Lawsuit (May 22, 2013)

In an effort to protect Vermont’s small businesses and non-profit organizations, Attorney General Bill Sorrell filed a first-of-its-kind lawsuit today against MPHJ Technology Investments, LLC. It marks the first time that a state attorney general has filed suit against a so-called “patent troll.” The complaint alleges that MPHJ Technology has engaged in unfair and deceptive acts under Vermont’s Consumer Protection Act.

MPHJ Technology claims to have a patent on the process of scanning documents and attaching them to email via a network. The Attorney General’s complaint alleges that the company has sent letters containing multiple deceptive statements and demanding about $1,000 per employee, to many Vermont small businesses as part of a nationwide campaign. At least two of those businesses are non-profits that assist developmentally disabled Vermonters.

Patent trolling is a national problem. A recent major study out of Boston University estimated the cost of patent trolling on the US economy at $29 billion in 2011 alone. Representative Peter Welch recently co-sponsored the Saving High-Tech Innovators from Egregious Legal Disputes (“SHIELD”) Act of 2013 in Congress to address the problem and the Federal Trade Commission held a workshop to address patent trolling in December 2012.

The Vermont Legislature passed first-in-the-nation legislation creating a new tool for targets of patent trolling and for the Attorney General to address the issue. Governor Peter Shumlin is expected to sign the bill into law today.

Gov. Shumlin indeed signed into law the amendment that permits lawsuits against patent holders making bad-faith IP infringement allegations.

Oh, it’s not over yet…

“If you call within the next 10 minutes, we’ll include yet another U.S. Senate anti-troll bill for free!

This is in addition to the [fifth-front? I’ve stopped counting] simultaneous introduction by U.S. Sen. John Cornyn (R-Tex.) of the “Patent Abuse Reduction, requiring greater levels of claim disclosure by plaintiffs, identification of related entities, and greater cost risks for unsuccessful claimants as well as cost-sharing of extensive U.S.-style patent discovery that goes beyond the “core documentary evidence”.

Call now!

We can’t wait to see the comments of the likes of NTP, Wi-LAN, Ray Niro and other NPE-specialised attorneys on these multi-pronged attacks.  I’m sure they will (quite likely much more quietly, because nobody want to support a ‘troll’ publicly) lobby against the proposed legislative initiatives.  Yet, they will have a tough time arguing that they are being targeted unfairly.  That’s because there’s a difference to “tort reform”, i.e., prior decades’ Republican complaints about personal-injury and product-liability lawsuits.  What’s different this time around about the ‘war’ on plaintiffs’ lawyers and allegedly “frivolous” lawsuits is that the legislative and executive governmental attacks on IP NPEs and their lawyers/lawsuits come from all political stripes & colours, not just Republicans


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s