Michigan Gov. Rick Snyder recently signed into law a bill that prohibits “bad-faith” assertion of patent infringement claims and provides for remedies. It provides for a person or entity that is the target of a bad-faith assertion of patent infringement to bring an action in state court against those asserting the patent infringement claims. The bill also authorizes the attorney general to bring civil actions against them. Monte Falcoff, a registered patent attorney and principal of the Detroit office of Harness Dickey, represents some of the most prominent organizations driving IP related commerce today. His patent and trademark clients include multi-national corporations, universities, foreign and domestic privately owned companies, and small U.S. based ventures.
Thorpe: What was the genesis of this bill? Are these sorts of “bad faith” attempts common?
Falcoff: The new Michigan Bad-Faith Patent Infringement Claims Act is one of the rare situations where states become involved with patent issues, which is typically the exclusive domain of the federal courts and U.S. Patent and Trademark Office. Federal law preempts state law in light of the U.S. Patent Act, 35 U.S.C., however, state courts and state contract law are occasionally employed to resolve patent licensing or ownership disputes.
There have been some notorious situations where such patent trolls mass-mailed patent infringement assertion letters to thousands of companies threatening to sue if a royalty was not paid for all products sold. This was done without the patent trolls having a good faith basis, in other words, without having seriously compared the accused products with the patent claims as is typically done.
Not only are significant attorney fees and time incurred to investigate whether there actually is infringement or not, but then to hire litigation counsel, have that firm get up to speed on the facts and then prepare the necessary motions, incurs even greater fees and costs. Essentially, it was a force of extortion.