News

States step up patent troll reform as Congress steps back

May 23, 2014

It’s fortunate that states are taking action to protect businesses from spurious demands by patent trolls, since it appears nothing will be happening soon on that front in Washington, D.C.

As a House judiciary subcommittee discussed proposed patent reform bills and drafts yesterday, Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., removed his promising bill from the voting agenda of his committee.

According to a report by CUNA News Now, Leahy said the move was prompted by a lack of “sufficient support” for a comprehensive deal.

"If the stakeholders are able to reach a more targeted agreement that focuses on the problem of patent trolls, there will be a path for passage this year and I will bring it immediately to the committee," he said.

Meanwhile, the Wall Street Journal reported that last Friday, Oklahoma became the 12th state to pass patent troll legislation designed to protect the state’s small businesses from baseless demands from patent assertion entities.

The Oklahoma law was spurred by lawsuit threats directed at the state’s banks over their use of ATM software, said Steven Mullins, general counsel to Oklahoma Gov. Mary Fallin.

So far, 26 states have introduced or enacted patent troll legislation. Some of these laws allow companies to sue patent trolls and set higher standards for demand letters — including the requirement for a patentholder to present evidence of infringement.

WSJ cited a 2012 study saying that 40 percent of small firms that received demand letters from patent trolls delayed hiring, changed their product or business strategy or experienced other “significant" effects on their operations. The study was conducted by Colleen Chien, an assistant professor of law at Santa Clara University now employed in the White House Office of Science and Technology Policy.