MUTH'S TRUTHS 03/20/2014

Nevada should Join Crackdown on “Patent Trolls”

by Chuck Muth

March 20, 2014

“Patent trolls” who prey on businesses ranging from high-tech giants such as Google and Apple to main street businesses, have finally awakened the sleeping giants in state legislatures and, as such, now have big, red targets on their own backs.

Patent trolls buy up questionable patents, often on software products and applications, then spring up out of nowhere to shake down unsuspecting businesses demanding “licensing” payments to avoid being sued.  Benjamin Berman, defense attorney for patent troll victim Kayak Software Corp., refers to them as “today’s Mafia.”

For example, one infamous patent troll has been threatening to sue local coffee shops, alleging that providing free Wi-Fi for customers violates a patent they bought up from someone else. 

In another example, hamburger chain White Castle has been sued for allegedly violating a patent on using the process of changing digital menu boards from its headquarters.

Talk-show host Adam Carolla has been sued by a patent troll demanding $3 million over claims that Carolla is infringing on some patent by “podcasting” his show. 

And AT&T last year was sued, on average, once a week by patent trolls!

Unfortunately, most victims of troll abuse pay the extortion rather than pay the cost of defending themselves in court.  But help is on the way…

Patent trolling is an extremely lucrative enterprise that’s been growing like a weed all over the U.S.  And there’s now legislation before Congress targeting the practice.  But a number of states aren’t waiting for Congress to act…which often seems like waiting for the world to end.

Last month Oregon passed a bill making patent trolling – described by the Senate sponsor as an “extortion scam” - a violation of the state’s Unlawful Trade Practices Act.  As an example, a number of construction businesses in Oregon received letters demanding a $150 licensing fee “for the normal process of using fans to reduce moisture at a construction site.”

Also last month, the Kentucky state Senate passed a bill that “would crack down on patent infringement claims by groups known as ‘patent trolls,’ which seek to exploit patent law for monetary gain.”  

Neighboring Tennessee is following a similar course.

The Virginia General Assembly recently passed legislation prohibiting “bad faith claims of patent infringement (that) force businesses, including many small businesses, to choose between paying exorbitant and unjustified license fees or fighting the claim through costly litigation.”

And the Wisconsin state Senate joined the state Assembly this month in unanimously passing an anti-patent troll bill that prohibits demand letters from containing “false, misleading or deceptive information” and authorizes the attorney general to prosecute trolls and nail them with a $50,000 fine for each violation.

It’s high time for Nevada to join this fight, especially against trolls that are targeting our state’s gaming and tourism businesses.