SPRINGFIELD, Ill. (Legal Newsline) -- Illinois senators voted unanimously Wednesday to send a bill that aims to protect state businesses from so-called "patent trolls" to the House.
Senators voted 48-0 for Senate Bill 3405.
The bill, which was crafted by Attorney General Lisa Madigan's office and sponsored by state Sen. Daniel Biss, D-Evanston, would crack down on the number of demand letters being sent by patent trolls to small businesses, retailers and manufacturers in the state.
Difficult to define, a "troll" -- a term coined by Peter Detkin, counsel for Intel, in the late 1990s -- purchases groups of patents without an intent to market or develop a product. In some cases, but not all, the non-practicing entity or patent assertion entity then targets other businesses with lawsuits alleging infringement of the patents it bought.
In their demand letters, these entities often fail to disclose basic information, including the actual owner of the alleged patent and the circumstances surrounding any alleged infringement.
According to Madigan's office, identical letters have been sent to "thousands" of businesses and often falsely threaten litigation even though they have no intention of filing lawsuits.
And in some cases, trolls have targeted businesses for simply purchasing products in the commercial market, the attorney general said.
Basically, the letters are designed to take advantage of businesses with no expertise in patent disputes, Madigan said Wednesday.
"We need better protections for small businesses facing deceptive and costly demands from patent trolls," she said following the Senate vote.
"This legislation will ensure the rights of legitimate patent holders while cracking down on this fraudulent practice."
In particular, the bill would ban demand letters that:
- Contain false or deceptive information;
- Are sent by individuals who do not have the right to license or enforce a patent;
- Falsely threaten litigation if a fee is not paid; and
- Fail to identity the individual asserting the patent and explain the alleged infringement.
"As we consider ways to make it easier for businesses to operate in Illinois, it makes sense to ensure that our laws prohibit scams that cost them money and valuable time," Biss said.
State Rep. Ann Williams, a Democrat, will sponsor the bill in the House chamber.
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.