“There aren’t enough federal remedies today, the federal protections don’t exist,” said Eric Paley, a venture capitalist with Cambridge-based Founder Collective.
Patent trolls are companies often created for the sole purpose of owning and acquiring patents and suing other companies. For many companies, especially small startups, it is far cheaper to settle. Using broad patents, patent trolls will send demand letters to any company that uses a remotely similar technology or technique. One notorious troll tried to sue companies for using an online shopping cart.
“Usually the cases are meritless,” said Philip Swain, an attorney at Foley Hoag who represents tech companies against patent trolls. “A ransom is a lot less costly than litigating it all the way.”
The Senate bill would explicitly ban “bad-faith” infringement claims that do not have enough information or are deceptive. If passed, the bill would require patent infringement suits and demand letters to include specific patents that have been violated. The Constitution puts patent law under federal jurisdiction, but 29 states have passed similar laws based on jurisdiction over business-to-business commerce that allow targeted companies to sue patent trolls.
In an open letter signed by dozens of local tech executives, the group says patent trolls are hurting Bay State companies.
“In all cases it distracts the most valuable employees from driving innovation at their organizations,” the letter said.
The bill, filed by former state Sen. Anthony Petruccelli, was reported positively out of the Consumer Protection and Professional Licensure Committee in March and is now in the Ways and Means Committee.
Because many of the claims never end up in court and the settlements include confidentiality provisions, it is nearly impossible to know how many claims patent trolls send each year, or how much money is paid. A 2013 Obama administration study found companies paid patent trolls $29 billion in 2011.
“There is no upside from this to employers, employees or the Massachusetts economy,” said Ellen Rubin, chief executive of ClearSky Data. “This has to stop.”
©2016 the Boston Herald Distributed by Tribune Content Agency, LLC.
