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FTC to Target Patent Trolls

The US Federal Trade Commission is fully entrenched in an ongoing study of patent licensing firms, aka patent assertion entities (PAEs) aka patent trolls. In the meantime, however, agency officials are free to focus enforcement powers on patent trolls any time they're deemed to be unfairly threatening patent infringement lawsuits.

"Further reforms to the patent litigation system are clearly warranted to make it more difficult for PAEs and others that seek to profit by bringing, and threatening to bring, frivolous patent infringement lawsuits," FTC Commissioner Julie Brill said during a recent forum on the issue of patent trolls.

Large technology firms and digital rights groups are lobbying Congress to pass troll-busting patent reform legislation, citing multiple studies that show PAEs account for more than half of all patent infringement lawsuits filed in the US over the past decade. But others are calling for a hold-out, arguing that PAEs are not causing serious issues and suggesting that recent patent reform legislation may deliver an unwarranted and unfair hit to intellectual property rights.

Proposal of the Innovation Act of 2013, which passed in the US House of Representatives but stalled in the Senate, and the FTC's continuing study were prompted by cases like the one the FTC filed against and ultimately settled with MPHJ Technology Investments. Between September 2012 and June 2013, the company sent more than 9,000 patent licensing demand letters to some 4,800 small businesses nationwide, lobbing bogus legal threats. The letters accused businesses of patent infringement for use of computer scanning equipment and threatened lawsuits against businesses that failed to pay the company licensing fees.

The FTC shot back, charging MPHJ with violating a federal unfair business practices statute and making deceptive representations in asserting patent rights. Several individual states including New York and Vermont also have filed or settled similar lawsuits against the company.

Passage of the Innovation Act would solve multiple patent troll-related issues being examined in the FTC's study, including "bare-bones" documentation requirements that allow PAEs to bring suits based on incredibly vague merits. It also would allow courts more authority to award attorney’s fees and discovery costs to defendants in questionable patent infringement claims. And it can't happen soon enough, Brill says.

"There's no need to wait for the completion of [the FTC’s] study to act on these and other key legislative patent reform proposals,” she said. “Various provisions in the bills will most certainly discourage frivolous lawsuits and improve patent quality - actions that I believe are needed now."

In any case, patent law is a complex field that requires aggressive representation when a dispute arises. If you need help filing for or defending a valid patent application, contact Daniel Law Offices in Orlando at 866-37PATENT today.

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