PROVIDENCE, R.I. (Legal Newsline) – Rhode Island has joined the growing number of states looking to enact legislation targeting so-called “patent trolls.”
Like so many other state attorneys general in the last year, Rhode Island’s Peter Kilmartin has filed legislation that would prohibit bad faith assertions of patent infringement against state businesses and individuals.
Kilmartin
Generally speaking, a non-practicing entity, patent assertion entity or patent monetization entity purchases groups of patents without an intent to market or develop a product.
In some cases, but not all, the entity then targets other businesses with lawsuits alleging infringement of the patents it bought. Often, these are referred to as “patent trolls.”
In the last few years, consumers, small business and even non-profit agencies have been targeted by trolls because they have bought or are using products with a wide range of patented technology, such as printers or scanners.
“The threat of a frivolous lawsuit, let alone the cost of litigation should a lawsuit ever be filed, can be devastating, particularly for small business owners and non-profit agencies,” Kilmartin said Wednesday.
The Rhode Island legislation — Senate Bill 0596 or House Bill 5455 — was filed on behalf of Kilmartin by Senate Minority Leader Dennis Algiere, a Republican, and Rep. Brian Kennedy, a Democrat and chair of the House Corporations Committee.
The bill, introduced March 3, remains in the Senate Judiciary Committee as of Wednesday.
The proposed law would prohibit a person from making bad faith assertions of patent infringement against a Rhode Island target. It also would allow a target to bring action in Rhode Island Superior Court against the patent troll, where they may be awarded equitable relief, actual damages, costs, attorney fees and exemplary damages.
The legislation also would give Kilmartin’s office civil investigative powers, including the ability to bring civil actions against trolls.
If found to have made a bad faith assertion, the troll could face a maximum penalty of $250,000.
Kilmartin said many patent trolls bank on a small business simply paying the alleged license fee, instead of fighting the matter in court.
“It’s deceptive and a misuse of our current patent system,” he said. “Rhode Island’s small businesses have enough obstacles to success already. They cannot afford to be attacked by dubious patent trolls looking to make a quick buck.”
The attorney general said nonprofits and businesses — including banks, hospitals, restaurants and hotels — need better protection from what he describes as “essentially boardroom shakedowns.”
“The hospitality industry is comprised predominantly of small business owners who are working day and night to keep their doors open and provide jobs to the more than 70,000 folks who choose to work in our industry,” said Dale J. Venturini, president and CEO of the Rhode Island Hospitality Association.
“Patent trolls are becoming more and more problematic within our industry, and we applaud Attorney General Kilmartin and the members of the legislature who are taking a stand against this baseless monetary attack.”
The association represents more than 650 restaurants, hotels and affiliated businesses.
The legislation also has garnered support from the Greater Providence Chamber of Commerce.
“As the advocate for growing and protecting the business community in Rhode Island, the Greater Providence Chamber of Commerce is pleased to join with Attorney General Kilmartin, Representative Kennedy and Senator Algiere to help shield companies from needless, costly and abusive patent infringement lawsuits,” President Laurie White said.
“Rhode Island businesses are looking to expand, but their growth is threatened by the actions of a few bad actors. If we want to create new jobs and grow our economy, we must crack down on these harmful and illegitimate threats from patent assertion entities.”
To read the full bill, click here.
From Legal Newsline: Reach Jessica Karmasek by email at [email protected].
