Yesterday, the General Assembly passed compromise legislation crafted by the Office of attorney general Mark Herring to protect Virginia businesses from “patent trolling.” 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 enjoy the support of a broad, bipartisan coalition 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.“Virginia’s high-tech industry has been an incredible engine of economic growth over the last two decades, and I was proud to work with these Virginia businesses in the legislature, but in recent years it has become a frequent target of baseless lawsuits that stifle growth and tie up the courts,” said Attorney General Herring. “I’ve signed on to efforts to fight patent trolling because far too many of our businesses, especially small businesses, are being forced to spend huge sums of money defending themselves against these frivolous claims. We need legislation to protect their interests, and the rights of parties to file legitimate claims, while allowing space for innovation and growth. After great work by members of my staff, the patrons, and stakeholders from the high-tech and business communities, I think we’ve got strong bills that strike that balance. It is my hope that Congress will quickly follow our example.”
SB150 and HB375 establish criteria for determining that 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 criteria 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 infringement claims that have previously been declared baseless by a court.
“We appreciate the Attorney General’s leadership in championing this legislation to protect Virginia businesses from patent trolls who abuse the patent system by employing bad faith assertions of patent infringement,” said Bobbie Kilberg, President & CEO of the Northern Virginia Technology Council. “Through their strong, bipartisan efforts, attorney general Herring, Senator Stuart and Delegate O’Quinn have helped to curtail patent abuse in the Commonwealth and its detrimental impact on innovation, job creation and Virginia’s economic growth.”
“Until Congress can enact meaningful patent reform at the federal level, this legislation will help cut down on the baseless claims which tie up the courts and cost Virginia businesses thousands in legal fees,” said Sen. Richard Stuart, patron ofSB150. “I appreciate the hard work of my staff, my fellow legislators, the Office of the Attorney General, and the stakeholders in the business community and high-tech sector whose contributions helped produce a strong compromise bill.”
“No Virginia business owner should live in fear that they will go under because of the cost to defend a frivolous lawsuit brought by a patent troll,” said Del. Israel D. O’Quinn, sponsor of HB375. “I’m glad we were able to work in a bipartisan way to protect the small businesses that form the backbone of Virginia’s economy and the high tech companies that help drive innovation and our Commonwealth’s economic growth.”
The bill empowers the attorney general to investigate cases of patent trolling and allows the attorney general and Commonwealth’s Attorneys to bring actions to recover civil penalties and to force patent trolls to change their behavior. Where settlements can be reached with patent trolls, the attorney general will also be able to present such settlements to the court for approval and enforcement.
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 preempt 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.
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