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Maine Lawmakers Consider Limiting Patent Trolls
01/02/2014   Reported By: Mal Leary

Companies that try to make a fast buck by asserting that they have a patent on a computer program or process or a piece of equipment are coming to the attention of Maine lawmakers who will consider legislation to crack down on them this session. So-called patent trolls have already been at work in Maine seeking to get payments from businesses and non-profits for dubious and sometimes non-existent patents.

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All litigation is expensive, but lawsuits involving patents are particularly expensive because of their complexity. What's been happening across the country is that companies are buying patents with no intention to actually use them in a product or process. Instead, they make money by threatening to sue other companies or non-profits that may be using a computer process or piece of equipment for patent infringement. Sen. Anne Haskell, a Portland Democrat, has introduced legislation to make what is called patent trolling more difficult in Maine.

"Because I sit on a bank board I have become aware of the patent trolls that have come forward regarding ATM’s and how that information is collected and then disseminated and there are patent trolls who have sued banks across the state saying that they hold a patent on how this process works," Haskell said.

She said it can be very expensive to fight such cases. She is proposing that any company or person who believes there has been a bad faith assertion of patent infringement to bring a lawsuit in superior court for general damages, court costs and punitive damages. Her proposal also authorizes the attorney general to take action under Maine’s Unfair Trade Practices Act for a bad faith assertion of patent infringement.

"We are talking about different kinds of software applications, and so that’s what makes this different than patenting a tire or a piece of machinery," Haskell said.

Maine Attorney General Janet Mills said it’s a growing problem across the country and it was also a major topic at the fall meeting of the National Association of Attorneys General. She said while patent enforcement is usually a federal matter, states are taking action under Unfair Trade Practices laws and she is pleased Haskell has introduced legislation making it clear Maine’s law can be used against patent trolls.

"Those actions include unfairly asserting you have a patent when you may have purchased the patent solely for the purpose of extracting fees from unwitting small businesses and non-profit entities who have no idea whether you actually have a patent," Mills said.

She said what is very troubling is that a judge may never actually decide a lawsuit because the business or non-profit seeks to settle the claim for less than the cost of fighting it in court. But all of those small settlements can add up to large profits. "So the very threat of patent litigation and the demand for a certain fee of an amount that would make it more palatable to settle than to fight in court, result in these patent assertion entities getting millions of dollars in fees which they may or may not deserve," Mills said.

A study by Boston University researchers indicates that more than 5,800 lawsuits were brought by patent trolls in 2011 at a cost of more than $29 billion dollars nationwide. More than half of all patent infringement lawsuits are now attributed to patent trolls, up from less than a third. Mills said Congress is also considering legislation to curb the lawsuits, but she said states should also act because it’s far from certain that Congress will actually pass any legislation dealing with the problem.

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