February 27, 2017
Originally posted 2018-11-19 11:17:17
By Christina Severino | amdlawgroup.com
A study published by Boston University in 2012 found that over $29 billion of direct costs were generated by patent troll patent assertions. Further, it is estimated that these costs ballooned to over $80 billion, once the stock market reacts to such litigation. “Patent trolls,” or Non-practicing entities (NPEs), can be either a company or individual who essentially purchases patents, but has no intention to develop and market a product arising from that patent.
Despite the negative impact patent trolls have on the U.S. economy, there is a conflict between federal and state law regarding how these claims are dealt with. The main conflict is that federal law will generally preempt any state laws specific to improper use of patents. However, there is a loophole for state courts: states may guard against misuse of bad faith claims. States in turn will preserve some autonomy in regulating the type and frequency of bad faith claims raised by patent trolls, so that businesses are not negatively impacted and so courts will not be riddled with so many of these frivolous claims.
A collective effort by the Attorneys General is ensuing, in order to raise attention to the practices of these trolls. A federal legislation reform will likely be the outcome, as a majority of the Attorneys General have already submitted a letter to the U.S. Senate, calling their attention to the need for such legislation. The letter stated, “So-called patent trolls stifle innovation and harm our economy by making dubious claims of patent infringement and using the threat of expensive litigation to extort money from small businesses and nonprofits. We have received many complaints from these businesses and nonprofits, our constituents, who are desperate for relief from the misuse of the patent system. While these threats were once focused on tech businesses, they are now levied at all manner of businesses, including banks, hospitals, restaurants and hotels.”