Governor signs AG’s legislation to combat patent trolls

mark herringToday, Governor Terry R. McAuliffe ceremonially signed SB150 and HB375, compromise legislation brokered by the Attorney General Mark R. Herring’s office to protect Virginia businesses from patent trolls.

These bad faith claims of patent infringement force businesses, including many small businesses, to choose between paying exorbitant and unjustified license fees or fighting the claim through costly litigation. The bills were supported during session by a broad, bipartisan coalition of legislators and stakeholders including the Northern Virginia Technology Council, Virginia Chamber, Fairfax County Chamber of Commerce, Virginia Bankers Association, Virginia Retail Association, and Virginia Hospitality and Travel Association.

“Unfounded and bad faith claims of patent infringement undermine the system of intellectual property protections which is absolutely key to the innovation-driven economy that will keep Virginia globally competitive,” said Attorney General Herring. “Virginia businesses of all sizes could be targets, from the small family business on main street all the way up to our large, high-tech employers, and they are then faced with the decision of whether to engage in an expensive court battle or to just pay the patent troll to go away. We think this bill offers Virginia businesses real protections in the face of federal inaction on the issue and I’m encouraged to see such broad, bipartisan support for this compromise legislation we were able to help craft. I would again like to thank the sponsors of these bills, their staffs, my legislative team, and the stakeholders who helped deliver a strong bill that protects businesses from frivolous lawsuits and protects the interests of those who hold legitimate, strong patents.”

These bills, which went into effect on July 1, empower the Attorney General to investigate cases of patent trolling and allow the Attorney General and Commonwealth’s Attorneys to bring actions to recover civil penalties and to force patent trolls to change their behavior, even if those responsible are located outside Virginia.If the Attorney General can reach an assurance of voluntary compliance with the suspected patent troll, that assurance can be presented to the court for approval and subsequent enforcement.

The new laws also establish criteria for helping to identify when a patent infringement claim is being made in bad faith, a practice that costs the United States’ economy as much as $29 billion per year, according to a recent study. Those factors include issuing a letter claiming infringement which includes false statements, does not identify the patent holder, or fails to specify how the target is infringing, demanding an unreasonable license fee, or reasserting patent or infringement claims that have previously been declared invalid baseless by a court.

The recently adopted state budget includes funding for staff in the Office of Attorney General to handle allegations of patent trolling and the office has begun establishing infrastructure and procedures for investigating and taking appropriate action against patent trolls.

These bills protect both the targets of patent trolls and the holders of strong, legitimate patents who may need to bring a legitimate claim of infringement. The bills do not affect federal patent laws or make it harder for a person or organization to get a patent. These bills do not change how valid patents are issued and valued and there will be no interference with legitimate, good faith patent enforcement efforts.

This legislation was made necessary by the absence of a federal solution to address patent trolling. In addition to working on state-level legislation, Attorney General Herring and 41 other state and territorial attorneys general recently sent a letter to the leadership of the U.S. Senate’s Commerce, Science and Transportation and Judiciary committees expressing support for patent reform legislation that will crackdown on patent trolling.