RALEIGH, N.C. (Legal Newsline) - A bill that includes a provision aimed at combating so-called "patent trolls" is closer to becoming law in North Carolina.

The "Abusive Patent Assertions Act," an article within Senate Bill 648, attempts to "strike a balance" between the interests of the state's businesses and economy and those legitimate patent enforcement actions.

A stand-alone version of the legislation already has passed the House of Representatives; however, SB 648 -- which includes other provisions aimed at protecting pharmaceutical companies and certain companies against asbestos lawsuits -- remains in negotiations between the House and Senate.

The bill's authors -- state Sens. Jerry Tillman, Brent Jackson, Wesley Meredith and Jim Davis, all Republicans -- argue that the legislation is necessary as the state is home to a growing "high-technology, knowledge-based" economy, and to continue growing, it must attract new, small and mid-sized technology companies.

"Doing so will help provide jobs for North Carolina's residents and boost North Carolina's economy," the bill states.

The state also is home to retail and manufacturing companies -- which are more likely to succeed if not inhibited by abusive and bad-faith demands and litigation, the lawmakers argue.

"Patent litigation can be technical, complex and expensive," the bill states. "The expense of patent litigation, which may cost millions of dollars, can be a significant burden on companies.

"North Carolina wishes to help its businesses avoid these costs by encouraging the most efficient resolution of patent infringement claims without conflicting with federal law."

Like other state patent troll bills, SB 648 gives jurisdiction to a state court over a person or entity that sends a "demand letter" to a state-based company.

Demand letters -- the crux of the ongoing patent reform debate -- are often sent by patent trolls in an attempt to enforce or assert rights in connection with a patent or a pending patent.

Generally speaking, patent trolls are those patent assertion entities or non-practicing entities that purchase groups of patents without an intent to market or develop a product and then target other businesses with lawsuits.

If a letter is found to be in bad faith, the legislation provides for equitable relief, monetary damages, costs and reasonable attorneys' fees, as well as "exemplary damages" of either $50,000 or triple the total damages, costs and fees, whichever is greater.

The bill basically is one vote away from being sent to the governor's desk.

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

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