Patent troll harassment part of Bruning's legislative package

By Jessica M. Karmasek | Jan 13, 2014

LINCOLN, Neb. (Legal Newsline) -- Last week, Nebraska Attorney General Jon Bruning unveiled his legislative goals for 2014, one of which aims to protect consumers and small businesses from patent troll harassment.

Bruning held a press conference Tuesday to announce his legislative package for the year. Joining him was state Sen. Heath Mello, of Omaha.

Mello said he plans to introduce a bill that will target so-called patent trolls, or entities that buy groups of technology patents, then turn around and threaten to sue users or makers of the products using the technology in hopes of exacting licensing fees or filing lawsuits.

Nebraska law currently does not address the problem.

"While we expect our federal patent system to protect the intellectual property of those who create inventive new products and services, a growing number of 'patent trolls' have been asserting patent infringement claims to extort money from Nebraska businesses and consumers," Mello said in a statement.

"Under the proposed legislation, a bad faith assertion of patent infringement would be a specific violation of Nebraska's existing consumer protection statute, the Uniform Deceptive Trade Practices Act."

The legislation would provide criteria for courts to determine whether a bad faith assertion had been made.

It also would require that any person sending 25 or more patent assertion letters within a one-year period notify the Attorney General's Office of each business and address to which a demand letter was sent, Mello explained.

Currently, only Vermont has a similar state statute designed to specifically address patent trolls.

According to the Attorney General's Office, patent trolls accounted for more than 60 percent of the roughly 4,000 patent lawsuits filed last year in the United States.

Bruning said they have created hundreds of shell companies, most organized under Delaware law as limited liability companies, which makes tracing the owners next to impossible.

What often happens, the attorney general explained, is that businesses pay the licensing fees to avoid the crushing costs of defending themselves in court.

One entity in particular, MPHJ Technology Investors, has been accused of demanding businesses pay $1,000 per worker for using a process of scanning and emailing an electronic document.

"Utilizing our patent system to squeeze money from Nebraska consumers is a scam," Bruning said.

Also last week, Bruning appeared at the International CES, the world's largest consumer technology tradeshow, held in Las Vegas.

The attorney general joined Federal Trade Commissioner Julie Brill, and others, as part of a panel Wednesday looking at patent trolls and possible legislative solutions.

According to reports, Bruning shared a story of an older constituent who received a troll letter but couldn't afford to hire a patent attorney.

Bruning told the panel that state attorneys general, like himself, need to step in and help businesses being attacked by such trolls.

"If the AGs don't do it, who's gonna do it?" he said.

"These guys are thugs. We are going to take them down."

From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

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