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(Washington Post)   Vermont legislators watch Drew's TED talk, pass law outlawing patent trolling   (washingtonpost.com) divider line 35
    More: Hero, TED Talks, San Jose, plain, legislators, competition law, Vermont General Assembly, USPTO  
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2752 clicks; posted to Business » on 23 May 2013 at 10:39 AM (47 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-05-23 10:43:44 AM
1) Yeah, there is this little thing called federal preemption Vermont. But hey, I like your gumption

2) headline already gets me one square!
i80.photobucket.com
 
2013-05-23 10:44:51 AM
And before any of you smarties start talking about preemption, check out Dow Chemical v. Exxon, and the more recent  Hunter Douglas v. Harmonic Design.

/Subby
 
2013-05-23 10:45:34 AM

Teiritzamna: 2) headline already gets me one square!


Your post gets you another. ;)
And this one is part way to a third.
 
2013-05-23 10:49:48 AM
Official version of the bill is here, and the relevant part is:
CHAPTER 120. BAD FAITH ASSERTIONS
OF PATENT INFRINGEMENT
§ 4195. LEGISLATIVE FINDINGS AND STATEMENT OF PURPOSE
(a) The General Assembly finds that:
(1) Vermont is striving to build an entrepreneurial and knowledge based
economy. Attracting and nurturing small and medium sized internet
technology ("IT") and other knowledge based companies is an important part
of this effort and will be beneficial to Vermont's future.
(2) Patents are essential to encouraging innovation, especially in the IT
and knowledge based fields. The protections afforded by the federal patent
system create an incentive to invest in research and innovation, which spurs
economic growth. Patent holders have every right to enforce their patents
when they are infringed, and patent enforcement litigation is necessary to
protect intellectual property.
(3) The General Assembly does not wish to interfere with the good faith
enforcement of patents or good faith patent litigation. The General Assembly
also recognizes that Vermont is preempted from passing any law that conflicts
with federal patent law.
(4) Patent litigation can be technical, complex, and expensive. The
expense of patent litigation, which may cost hundreds of thousands of dollars
or more, can be a significant burden on small and medium sized companies.
Vermont wishes to help its businesses avoid these costs by encouraging the
most efficient resolution of patent infringement claims without conflicting with
federal law.
(5) In order for Vermont companies to be able to respond promptly and
efficiently to patent infringement assertions against them, it is necessary that
they receive specific information regarding how their product, service, or
technology may have infringed the patent at issue. Receiving such information
at an early stage will facilitate the resolution of claims and lessen the burden
of potential litigation on Vermont companies.
(6) Abusive patent litigation, and especially the assertion of bad faith
infringement claims, can harm Vermont companies. A business that receives
a letter asserting such claims faces the threat of expensive and protracted
litigation and may feel that it has no choice but to settle and to pay a licensing
fee, even if the claim is meritless. This is especially so for small and medium
sized companies and nonprofits that lack the resources to investigate and
defend themselves against infringement claims.
(7) Not only do bad faith patent infringement claims impose a
significant burden on individual Vermont businesses, they also undermine
Vermont's efforts to attract and nurture small and medium sized IT and other
knowledge based companies. Funds used to avoid the threat of bad faith
litigation are no longer available to invest, produce new products, expand, or
hire new workers, thereby harming Vermont's economy.
(b) Through this narrowly focused act, the General Assembly seeks to
facilitate the efficient and prompt resolution of patent infringement claims,
protect Vermont businesses from abusive and bad faith assertions of patent
infringement, and build Vermont's economy, while at the same time respecting
federal law and being careful to not interfere with legitimate patent
enforcement actions.

§ 4196. DEFINITIONS
In this chapter:
(1) "Demand letter" means a letter, e-mail, or other communication
asserting or claiming that the target has engaged in patent infringement.
(2) "Target" means a Vermont person:
(A) who has received a demand letter or against whom an assertion
or allegation of patent infringement has been made;
(B) who has been threatened with litigation or against whom a
lawsuit has been filed alleging patent infringement; or
(C) whose customers have received a demand letter asserting that the
person's product, service, or technology has infringed a patent.
§ 4197. BAD FAITH ASSERTIONS OF PATENT INFRINGEMENT
(a) A person shall not make a bad faith assertion of patent infringement.
(b) A court may consider the following factors as evidence that a person
has made a bad faith assertion of patent infringement:
(1) The demand letter does not contain the following information:
(A) the patent number;
(B) the name and address of the patent owner or owners and
assignee or assignees, if any; and
(C) factual allegations concerning the specific areas in which the
target's products, services, and technology infringe the patent or are covered
by the claims in the patent.
(2) Prior to sending the demand letter, the person fails to conduct an
analysis comparing the claims in the patent to the target's products, services,
and technology, or such an analysis was done but does not identify specific
areas in which the products, services, and technology are covered by the
claims in the patent.
(3) The demand letter lacks the information described in subdivision (1)
of this subsection, the target requests the information, and the person fails to
provide the information within a reasonable period of time.
(4) The demand letter demands payment of a license fee or response
within an unreasonably short period of time.
(5) The person offers to license the patent for an amount that is not
based on a reasonable estimate of the value of the license.
(6) The claim or assertion of patent infringement is meritless, and the
person knew, or should have known, that the claim or assertion is meritless.
(7) The claim or assertion of patent infringement is deceptive.
(8) The person or its subsidiaries or affiliates have previously filed or
threatened to file one or more lawsuits based on the same or similar claim of
patent infringement and:
(A) those threats or lawsuits lacked the information described in
subdivision (1) of this subsection; or
(B) the person attempted to enforce the claim of patent infringement
in litigation and a court found the claim to be meritless.
(9) Any other factor the court finds relevant.
(c) A court may consider the following factors as evidence that a person
has not made a bad faith assertion of patent infringement:
(1) The demand letter contains the information described in subdivision
(b)(1) of this section.
(2) Where the demand letter lacks the information described in
subdivision (b)(1) of this section and the target requests the information, the
person provides the information within a reasonable period of time.
(3) The person engages in a good faith effort to establish that the target
has infringed the patent and to negotiate an appropriate remedy.
(4) The person makes a substantial investment in the use of the patent or
in the production or sale of a product or item covered by the patent.
(5) The person is:
(A) the inventor or joint inventor of the patent or, in the case of a
patent filed by and awarded to an assignee of the original inventor or joint
inventor, is the original assignee; or
(B) an institution of higher education or a technology transfer
organization owned or affiliated with an institution of higher education.
(6) The person has:
(A) demonstrated good faith business practices in previous efforts to
enforce the patent, or a substantially similar patent; or
(B) successfully enforced the patent, or a substantially similar patent,
through litigation.
(7) Any other factor the court finds relevant.
§ 4198. BOND
Upon motion by a target and a finding by the court that a target has
established a reasonable likelihood that a person has made a bad faith
assertion of patent infringement in violation of this chapter, the court shall
require the person to post a bond in an amount equal to a good faith estimate
of the target's costs to litigate the claim and amounts reasonably likely to be
recovered under § 4199(b) of this chapter, conditioned upon payment of any
amounts finally determined to be due to the target. A hearing shall be held if
either party so requests. A bond ordered pursuant to this section shall not
exceed $250,000.00. The court may waive the bond requirement if it finds the
person has available assets equal to the amount of the proposed bond or for
other good cause shown.

§ 4199. ENFORCEMENT; REMEDIES; DAMAGES
(a) The Attorney General shall have the same authority under this chapter
to make rules, conduct civil investigations, bring civil actions, and enter into
assurances of discontinuance as provided under chapter 63 of this title. In an
action brought by the Attorney General under this chapter the court may
award or impose any relief available under chapter 63 of this title.
(b) A target of conduct involving assertions of patent infringement, or a
person aggrieved by a violation of this chapter or by a violation of rules
adopted under this chapter, may bring an action in Superior Court. A court
may award the following remedies to a plaintiff who prevails in an action
brought pursuant to this subsection:
(1) equitable relief;
(2) damages;
(3) costs and fees, including reasonable attorney's fees; and
(4) exemplary damages in an amount equal to $50,000.00 or three times
the total of damages, costs, and fees, whichever is greater.
(c) This chapter shall not be construed to limit rights and remedies
available to the State of Vermont or to any person under any other law and
shall not alter or restrict the Attorney General's authority under chapter 63 of
this title with regard to conduct involving assertions of patent infringement.
 
2013-05-23 10:52:25 AM

Theaetetus: And before any of you smarties start talking about preemption, check out Dow Chemical v. Exxon, and the more recent  Hunter Douglas v. Harmonic Design.

/Subby


Hrm.  I haven't seen the statute, but to me the description in the article feels much closer to being within the ambit of federal patent law than Dow or Hunter and their use of Little FTC acts: i.e. if it is directly targeted at the use of patents, even their deceptively, that feels like a federal matter.
 
2013-05-23 10:53:42 AM
A cursory analysis says that this bill doesn't apply to legitimate patent trolls (I know that sounds like an oxymoron), but only the Prenda Law-style "shotgun out a million vague threatening letters, with offers to settle for $5000". Any legitimate patent troll (there's that phrase again) would include their patent number, attempt to open negotiations rather than just a "give us $5k or we sue", and only target people that they reasonably think could infringe the patent.
 
2013-05-23 10:54:11 AM

Teiritzamna: Theaetetus: And before any of you smarties start talking about preemption, check out Dow Chemical v. Exxon, and the more recent  Hunter Douglas v. Harmonic Design.

/Subby

Hrm.  I haven't seen the statute, but to me the description in the article feels much closer to being within the ambit of federal patent law than Dow or Hunter and their use of Little FTC acts: i.e. if it is directly targeted at the use of patents, even their deceptively, that feels like a federal matter.


i think the problem is that i provides a cause of action against the troll.  but, if it were purely procedural, then maybe it could stand up.

/ got bored, dnrtfa completely, or even very attentively.
 
2013-05-23 10:54:30 AM
Yeah looking at the act, i think it makes a clever stab at avoiding preemption, but I think the fact that it is targeted to unfair use of something by law entirely within the federal sphere makes this different.  Will be a fun case to watch though, as it mixes IP and Federal Courts, my two loves.
 
2013-05-23 10:54:52 AM

Teiritzamna: Theaetetus: And before any of you smarties start talking about preemption, check out Dow Chemical v. Exxon, and the more recent  Hunter Douglas v. Harmonic Design.

/Subby

Hrm.  I haven't seen the statute,


Now you have. :D

but to me the description in the article feels much closer to being within the ambit of federal patent law than Dow or Hunter and their use of Little FTC acts: i.e. if it is directly targeted at the use of patents, even their deceptively, that feels like a federal matter.

Nah, this looks more like fraud under the guise of patent infringement, and does seem more like a state matter as a result.
 
2013-05-23 10:56:48 AM

Teiritzamna: Yeah looking at the act, i think it makes a clever stab at avoiding preemption, but I think the fact that it is targeted to unfair use of something by law entirely within the federal sphere makes this different.  Will be a fun case to watch though, as it mixes IP and Federal Courts, my two loves.


Consider if you were to bring suit for patent infringement when you don't actually own the patent... Would that be under title 35, or would it be under state fraud claims and state rule 11 sanctions? ;)
 
2013-05-23 10:56:59 AM

Theaetetus: Nah, this looks more like fraud under the guise of patent infringement, and does seem more like a state matter as a result.


That's the part that gives me pause, but the outer bounds of preemption are always so wacky.  I could, however, see the Fed Cir saying that this is a state telling patent holders what hoops they have to jump through to enforce, and thus it is not for the states.
 
2013-05-23 10:57:58 AM

Theaetetus: Consider if you were to bring suit for patent infringement when you don't actually own the patent... Would that be under title 35, or would it be under state fraud claims and state rule 11 sanctions? ;)


Oh sure, but the fact that the statute lays out what it considers when determining bad faith, it is basically a statute stating how you must enforce your patent rights pre-litigation, in Vt.
 
2013-05-23 11:03:33 AM

Teiritzamna: That's the part that gives me pause, but the outer bounds of preemption are always so wacky.  I could, however, see the Fed Cir saying that this is a state telling patent holders what hoops they have to jump through to enforce, and thus it is not for the states.

... Oh sure, but the fact that the statute lays out what it considers when determining bad faith, it is basically a statute stating how you must enforce your patent rights pre-litigation, in Vt.


Hmm... Not an unreasonable argument. Of course, if you actually have a patent that you'll be asserting, you'd easily get summary judgement of the state counterclaim.
 
2013-05-23 11:08:32 AM
I say we just kill all the lawyers.  Present company excepted, of course.
 
2013-05-23 11:10:37 AM
Um, the penalty will be seen as a prerequisite to getting into Federal Court, which they won't stand for.  As a policy, all courts don't want to burden filing lawsuits, much worse for a state court to burden a federal court filing.
 
2013-05-23 11:16:04 AM
FTFA:
And we think that we are attempting as best we can to legitimately identify people who are using the client technology
- Attorney for the patent troll


Um, shouldn't they be identifying companies that are  selling products containing the "client technology"?

Suppose I buy a new toaster. The maker of the toaster included some new gadget that made sure the bread never burnt. But that gadget is covered by a patent the maker hasn't licensed. Am I, as the owner of said toaster, responsible for the licensing fee? I should hope not. If the patent holder wants to sue the toaster manufacturer, that'd be one thing. But to start going after the people who bought the toaster shouldn't be legal.
 
2013-05-23 11:19:23 AM

rdu_voyager: FTFA:
And we think that we are attempting as best we can to legitimately identify people who are using the client technology
- Attorney for the patent troll

Um, shouldn't they be identifying companies that are  selling products containing the "client technology"?

Suppose I buy a new toaster. The maker of the toaster included some new gadget that made sure the bread never burnt. But that gadget is covered by a patent the maker hasn't licensed. Am I, as the owner of said toaster, responsible for the licensing fee? I should hope not. If the patent holder wants to sue the toaster manufacturer, that'd be one thing. But to start going after the people who bought the toaster shouldn't be legal.


35 USC 271(a): ... whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
 
2013-05-23 11:21:33 AM

rdu_voyager: Suppose I buy a new toaster. The maker of the toaster included some new gadget that made sure the bread never burnt. But that gadget is covered by a patent the maker hasn't licensed. Am I, as the owner of said toaster, responsible for the licensing fee? I should hope not. If the patent holder wants to sue the toaster manufacturer, that'd be one thing. But to start going after the people who bought the toaster shouldn't be legal.


35 U.S.C. 271(a) Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

You can be sued for using a patented item without license.*  It just rarely happens to regular ol' consumers because a) they are often a biatch to find, b) they have no money, c) it tends to piss them off.  It is much better to sue either big corporations who are acting as consumers, or the seller and add on a charge for inducing infringement by consumers. 

/*with some exceptions, such as doctors
 
2013-05-23 11:22:15 AM

Theaetetus: 35 USC 271(a): ... whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.


beat me because i decided to offer analysis
 
2013-05-23 11:26:19 AM

Teiritzamna: Theaetetus: 35 USC 271(a): ... whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

beat me because i decided to offer analysis


Hey, who you offer anal to is none of my business (though I think your sis is pushing it).
 
2013-05-23 01:41:34 PM

Theaetetus: Teiritzamna: Theaetetus: 35 USC 271(a): ... whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

beat me because i decided to offer analysis

Hey, who you offer anal to is none of my business (though I think your sis is pushing it).


except trolls go after consumers because they're more willing to settle compared to the big boys (who are starting to push back). the last thing they want is to actually goto court. they risk losing the patent itself if they lose.

the patent troll they interviewed tried to go after hp et all. hp basically said they're not infringing since the sell individual products, it's only infringement if they network them together. so the troll moved on to small business.
 
2013-05-23 02:33:06 PM
We did that in about the amount of time it takes for an ordinary state to fark its citizenry out of their taxes and burn the budget to the ground.
You other states need to start electing folks like we do up here in Vermont.
You might just benefit from not having an inbred turkey-necked hillbilly born-again bible-thumper in office, and instead, using a person who entirely cares about the well being of your state.
 
2013-05-23 02:58:46 PM
 
2013-05-23 03:24:54 PM

Theaetetus: Official version of the bill is here, and the relevant part is:
CHAPTER 120. BAD FAITH ASSERTIONS
OF PATENT INFRINGEMENT
§ 4195. LEGISLATIVE FINDINGS AND STATEMENT OF PURPOSE
(a) The General Assembly finds that:
(1) Vermont is striving to build an entrepreneurial and knowledge based
economy. Attracting and nurturing small and medium sized internet
technology ("IT") and other knowledge based companies is an important part
of this effort and will be beneficial to Vermont's future.
(2) Patents are essential to encouraging innovation, especially in the IT
and knowledge based fields.
The protections afforded by the federal patent
system create an incentive to invest in research and innovation, which spurs
economic growth. Patent holders have every right to enforce their patents
when they are infringed, and patent enforcement litigation is necessary to
protect intellectual property.
(3) The General Assembly does not wish to interfere with the good faith
enforcement of patents or good faith patent litigation. The General Assembly
also recognizes that Vermont is preempted from passing any law that conflicts
with federal patent law.
(4) Patent litigation can be technical, complex, and expensive. The
expense of patent litigation, which may cost hundreds of thousands of dollars
or more, can be a significant burden on small and medium sized companies.
Vermont wishes to help its businesses avoid these costs by encouraging the
most efficient resolution of patent infringement claims without conflicting with
federal law.
(5) In order for Vermont companies to be able to respond promptly and
efficiently to patent infringement assertions against them, it is necessary that
they receive specific information regarding how their product, service, or
technology may have infringed the patent at issue. Receiving such information
at an early stage will facilitate the resolution of claims and lessen the burden
of potential litigation on Vermont companies.
(6) Abusive patent litigation, and esp ...


I think this point is actually up for argument.
 
2013-05-23 03:28:32 PM

vudukungfu: We did that in about the amount of time it takes for an ordinary state to fark its citizenry out of their taxes and burn the budget to the ground.
You other states need to start electing folks like we do up here in Vermont.
You might just benefit from not having an inbred turkey-necked hillbilly born-again bible-thumper in office, and instead, using a person who entirely cares about the well being of your state.


I'm still pissed at Vermont for trying the GMO labeling thing again to protect their yuppie organic farmers from outside competition.
 
2013-05-23 03:51:56 PM
The American inventors act tried, but we're still seeing plenty of NPEs and patent trolls.
 
2013-05-23 04:10:38 PM

Theaetetus: A cursory analysis says that this bill doesn't apply to legitimate patent trolls (I know that sounds like an oxymoron), but only the Prenda Law-style "shotgun out a million vague threatening letters, with offers to settle for $5000". Any legitimate patent troll (there's that phrase again) would include their patent number, attempt to open negotiations rather than just a "give us $5k or we sue", and only target people that they reasonably think could infringe the patent.


So Vermont outlawed "extortion".
 
2013-05-23 05:30:43 PM
They may not be able to regulate patents themselves but they sure can regulate their own courts to include proper documentation and evidence in cases brought before it.
 
2013-05-23 05:43:35 PM

Kinek: vudukungfu: We did that in about the amount of time it takes for an ordinary state to fark its citizenry out of their taxes and burn the budget to the ground.
You other states need to start electing folks like we do up here in Vermont.
You might just benefit from not having an inbred turkey-necked hillbilly born-again bible-thumper in office, and instead, using a person who entirely cares about the well being of your state.

I'm still pissed at Vermont for trying the GMO labeling thing again to protect their yuppie organic farmers from outside competition.


Nothing wrong with labelling GMO as GMO.   I'd be pissed if I went to buy oil and got conventional instead of synthetic.
 
2013-05-23 06:10:26 PM

Marcus Aurelius: I say we just kill all the lawyers.  Present company excepted, of course.


Whoa, buddy. Sometimes you take things to far. Who are you to decide to except present company?

/kidding. I love a good lawyer thread, whether it's patent or something else, even if I don't understand half of it.
 
2013-05-23 06:21:34 PM
As a company who has been targeted by the MPHJ organization mentioned in the article, I hope Vermont succeeds.

We were targeted, because we have the gumption to use the functions in our HP Printers that allows us to attach scanned documents to emails automatically at the printer, or scan those documents and save them on the server.

If we infringe, HP does to, but they also take the position that the printer doesn't infringe until we take the affirmative step of integrating it into our network.

/We have a copy of a Ricoh patent that predates theirs, that we believe demonstrates prior art.
 
2013-05-23 06:41:30 PM

mrlewish: They may not be able to regulate patents themselves but they sure can regulate their own courts to include proper documentation and evidence in cases brought before it.


You cannot bring a patent suit in state court,* its federal jurisdiction only.

/*outside some fairly narrow and rare instances
 
2013-05-23 11:42:01 PM
Now, this needs to become a federal law. No single state can regulate interstate commerce. It is at least a step in the right direction.
 
2013-05-24 03:20:26 AM

Theaetetus: A cursory analysis says that this bill doesn't apply to legitimate patent trolls (I know that sounds like an oxymoron), but only the Prenda Law-style "shotgun out a million vague threatening letters, with offers to settle for $5000". Any legitimate patent troll (there's that phrase again) would include their patent number, attempt to open negotiations rather than just a "give us $5k or we sue", and only target people that they reasonably think could infringe the patent.


Thank you. LOL

I admit, I cheated. I opened the thread and scrolled through until I found your post putting it into simple terms.

While I'm here... Correct me if I'm wrong, the patent laws specifically include "make" in them. However, I was under the impression that I was free to make (and even badge) a copy of a Ford automobile and could use it without regards to the patent provided I didn't sell it. Is that not correct?

Anyone else know? If you do then feel free to chime in though I'd prefer an answer from only those who are certain of the law which is why I directed the question at him specifically.
 
2013-05-24 08:38:19 PM
I patented patent trolling, so I'm getting a kick...

/and kickbacks.
 
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