42 State Attorneys General Support Patent Reform

Feb 25, 2014 11:00 AM PST

LOS ANGELES — Attorneys general of 42 states yesterday called on the U.S. Senate to pass meaningful patent reform.

The call to action, coming in the form of a two-page letter, emphasizes the need for increased transparency, clarification of federal supremacy when it comes to what the states can do, clarification of state jurisdiction over bad-faith demand letters and litigation reform that would undermine “patent assertion entities," also known as PAEs

The PAEs, also known as "patent trolls," stockpile patent portfolios and use them to sue business entities, many of them online adult companies that rely heavily on technology to deliver content.

The Senate bill, S.1720 (the Patent Transparency and Improvements Act of 2013), and the related H.R. 3309 (the Innovation Act), which recently passed the House, would require greater clarity in patent demand letters and include patent litigation reforms that will help limit the power of patent trolls.

Over the past decade, scores of adult companies have been sued by PAEs over patent infringement claims relative to mobile media delivery technology, pop-under advertisements, live cam delivery, image-hosting technology and interactive online advertisements that use subscription models and data collection.

Other suits waged at adult companies by the PAEs have involved technology with the ability for web browsers to act as platforms for embedded applications and a certain formula for sending compressed audio and video signals over a network.

The adult companies, of course, have collectively spent millions on legal fees defending against unfamiliar patent-holding companies like Lodsys Group, Skky Inc., ExitExchange Corp., Joao Control and Monitoring Systems, Tejas Research, Eolas Technologies and Acacia Technology Group.

"So-called patent trolls stifle innovation and harm our economy by making dubious claims of patent infringement and using the threat of expensive litigation to extort money from small businesses and nonprofits," said the attorneys general of 42 states yesterday.

"We have received many complaints from these businesses and nonprofits, our constituents, who are desperate for relief from the misuse of the patent system. While these threats were once focused on tech businesses, they are now levied at all manner of businesses, including banks, hospitals, restaurants and hotels.

"Our offices have responded to these complaints by launching investigations and bringing enforcement actions against patent trolls, which have threatened thousands of businesses and non-profits for their use of common, everyday technology such as scanners and Wi-Fi networks. Our authority to protect businesses derives primarily from state statutes that prohibit unfair and deceptive acts. Though any patent holder has a right to fight infringement, it may not do so in a manner that is unfair or deceptive."

The letter was signed by attorneys general in Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Florida, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, and Wyoming.


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