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While comprehensive legislative patent reform remains largely bottled up, the fight to rein in patent abuse continues, at least on a piecemeal basis.
Under Burgess’ measure, which he has introduced in each congressional session since 2015 and which the House Committee on Energy and Commerce approved by a 30–22 vote that year, individuals or entities that abuse the patent system by sending meritless letters to companies demanding payment for their patents would face serious consequences.
Specifically, under the TROL Act, a party sending a demand letter will be considered to have engaged in “an unfair or deceptive act or practice” under federal law if it misrepresents the truth in bad faith (for example, by falsely claiming to have the right to enforce the patent), seeks compensation for a patent that either is invalid or to which the accused company already has a license, or fails to include “a description, to the extent reasonable under the circumstances, of how the product, service, or other activity of the recipient infringes an identified patent and patent claim.”
The Burgess bill defines bad faith as “knowingly false or knowingly misleading statements, representations, or omissions,” statements made “with reckless indifference as to the false or misleading nature of such statements,” or statements made “with awareness of the high probability of the statements . . . to deceive.”
Such bad faith conduct would be enforced by the Federal Trade Commission, which would preempt any similar laws recently enacted by numerous states but would nevertheless also empower state attorneys-general to file civil actions when residents of their states were adversely affected by the action. Violations of the statute would result in fines of up to $5 million.
“Entrepreneurship and innovation are key pillars of American opportunity,” Burgess stated in a press release announcing the bill’s reintroduction. “Too often, patent trolls foil progress with frivolous legal action — particularly in the Eastern District of Texas.”
More generally, Burgess contended that “the federal government should not be in the business of thwarting entrepreneurs’ ingenuity. The TROL Act is a commonsense solution that would protect Americans’ intellectual property and expand their opportunity to innovate.”
The reemergence of Burgess’ legislation comes in the shadow of an interesting recent development. As explained recently in this space, Apple relocated two of its retail stores from the cities of Frisco and Plano, located within the bounds of the Eastern District of Texas (a court generally thought to be congenial to patent owners), to Dallas, safely inside the Northern District of Texas. While Apple wouldn’t comment on whether patent concerns sparked the move, many observers believe they were the primary motivation.
“In North Texas,” Burgess went on to say, “Apple’s recent decision to close two stores located in the Eastern District and open a store outside of its jurisdiction underscores the need for legislation to limit patent trolls.”
Legislation such as the TROL Act has already been incorporated into more wide-ranging patent reform legislation, such as the PATENT Act. But that legislation has gone nowhere recently, and while there appears to be little appetite in Congress for comprehensive reform, more limited measures like Burgess’ bill may have a higher chance of becoming law.
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