Wisconsin is the latest state to entertain legislation aimed at curbing patent troll activity within its state. Last week, the State Assembly passed Senate Bill 498, as amended, which requires certain disclosures to be made in an initial demand letter alleging patent infringement. In addition to the information routinely supplied, patent owners will now have to identify not one claim, but all claims that they assert are being infringed. More telling, patent owners will have to detail how each claim is met by the accused technology. As an added bonus, they will also have to include all court proceedings (past and present) involving the patent. This could provide useful information as to how other similarly situated parties defended against similar infringement claims. Wisconsin is essentially mandating a patent claim chart showing infringement for any accused technology. Many trolls, who are serious about enforcement, already provide such information to accused infringers. So, while it may cut down on the issuance of shotgun cease and desist letters, it should not have a real impact on the more sophisticated trolls. Both the state attorney general’s office and aggrieved parties may bring claims for violations of the law. The state can seek penalties of up to $50,000 per violation. Private claimants can seek reasonable attorneys’ fees and costs and an award of punitive damages not to exceed $50,000 for each violation or three times the aggregate amount of actual damages and costs and attorneys’ fees awarded by a Court, whichever is greater Violations are based on “false, misleading or deceptive information” in the demand letter or if the required disclosures are not made within 30 days after the recipient notifies the enforcing party that the disclosures were incomplete. Importantly, no enforcement actions or private remedies may be sought solely based on an initially incomplete demand letter. Certain types of demand letters are exempt from the law- those sent by an institution of higher education and those involving patents subject to approval by the U.S. Food and Drug Administration. Determining what is “false, misleading or deceptive information” in this context seems to be a formidable task for state courts to entertain, especially since many of them do not routinely handle patent matters. Such cases are usually litigated in federal court. The stiff $50,000 per violation price tag and/or the threat of having a state investigation, however, may deter those from sending completely baseless demand letters.
Crowdfunding is becoming commonplace these days. Inventors are using it to bring their products to market and artists are using it as a means to fund movies and even new music platforms. Now, parties are using crowdfunding to combat patent trolls and Adam Carolla is leading the charge. Although it sounds like an interesting concept, there can be consequences for participating. Indeed, Personal Audio, the troll that sued Carolla, recently pressed this issue and, for the moment, lost. Last Fall, the Electronic Frontier Foundation (“EFF”) used crowdfunding to initiate an inter partes reexamination request with the USPTO of the patent that Personal Audio claims Carolla and others are infringing over podcasts. Personal Audio subpoenaed the EFF to learn the identities of the 1,000+ donors, arguing that it needed to verify whether any of the defendants, including Carolla, had contributed to the campaign as parties are estopped from making the same prior art arguments in court once pursued in an inter partes reexamination. Arguing that the Personal Audio’s request was overbroad and that its donors had a first amendment right of privacy, the EFF opposed the subpoena. It was reported that the assigned magistrate judge deferred on the first amendment issue, but felt that it was premature to seek this information at this point as the “estoppel” issue only arises once a final determination is made during a reexamination proceeding. For now, the donors’ identities may remain anonymous unless Personal Audio asks the U.S. District Court judge to override the magistrate’s decision and consider the issue. While crowdfunding can be an effective way of pooling resources, there can be consequences. Interestingly, had the EFF filed an “ex parte” reexamination request, there would have been a different result as “ex parte” reexaminations do not create the same “estoppel” effects as their “inter partes” cousins.
In what has been described as a “first of its kind” settlement, a so-called patent troll, MPHJ Technology Investments, LLC (“MPHJ”), has allegedly agreed to an “assurance of discontinuance” with the Minnesota Attorney General’s Office regarding its patent enforcement efforts in the State of Minnesota. Pursuant to the agreement, MPHJ has agreed to “cease its patent enforcement campaign” in Minnesota and not resume such activities without the AG’s consent. Further, MPHJ cannot assign the patents-at-issue to any third party who does not agree to be bound by such terms. The settlement was allegedly the result of investigations stemming from mass mailings threatening patent infringement against several small businesses in Minnesota. Interestingly, this is the same law firm and patent troll that the Attorney Generals’ Offices in Vermont and Nebraska dealt with over the last year. The states are clearly sending a message to patent trolls and to those law firms that represent them. When I worked at the Federal Trade Commission many years ago, the state Attorney Generals’ Offices worked hard to coordinate their enforcement efforts. It seems as though they are even more in sync today. As I have previously suggested, if your client receives what appears to be a baseless, mass-mailed cease and desist letter, it may want to consult the Attorney General’s Office within your state.