Rep. Kennedy, Sen. Algiere sponsor bill targeting ‘patent trolls’
STATE HOUSE – Rep. Brian Patrick Kennedy and Sen. Minority Leader Dennis L. Algiere have introduced legislation to protect Rhode Island citizens, businesses and organizations from being bilked through an unscrupulous use of patent law.
The bill (2016-H 7197) takes aim at “patent trolls,” individuals or companies that acquire patents solely for the purpose of using them to extract license fees and settlements from those targeted as alleged infringers. Consumers, small businesses and non-profit agencies are often targeted by patent trolls because they have purchased or used products with a wide-range of patented technology such as printers or scanners.
The legislation prohibits bad faith assertions of patent infringement against any Rhode Island target, and would allow any such target to bring action in Rhode Island Superior Court against the patent troll, where they may be awarded equitable relief, actual damages, costs, attorney’s fees and exemplary damages.
The law also gives the Office of Attorney General civil investigative powers, including the ability to bring civil actions against patent trolls. If found to have made a bad faith assertion, the patent troll could face a maximum penalty of $250,000 under the bill.
Both legislators said, while all Rhode Islanders deserve this protection, they are particularly concerned about the potential effects patent trolls have on small businesses.
“Rhode Island needs to enact legislation aimed at reining in the patent trolls who have saddled small businesses with costly legal fees and hindered job growth and development, by making bad faith claims and frivolous threats against Rhode Island’s business and non-profit communities,” said Representative Kennedy (D-Dist. 38, Hopkinton, Westerly), who serves as chairman of the House Corporations Committee.
Said Leader Algiere (R-Dist. 38, Westerly, Charlestown, South Kingstown), “Small businesses face enough roadblocks without having to worry about predatory patent trolls and the potential cost of litigation to fight them. Unfortunately, that’s exactly why they are a prime target for patent trolls. They don’t have the time or the resources to go to court, and because this person has a patent, their threat can sound legitimate. Patent trolls are abusing a system that was designed to protect ideas, not to provide a means for extortion, and we must enact this legislation so we can put an end to this corrupt practice.”
According to a report published by the Practicing Law Institute, frivolous patent litigation costs U.S. businesses approximately $29 billion a year in direct costs and $80 billion in indirect costs. And, according to a study published in 2014 by Price Waterhouse Coopers, almost 6,500 patent lawsuits were filed in the United States in 2013, of which 67 percent of those lawsuits were filed by patent trolls.
The legislation has the support of Attorney General Peter F. Kilmartin, the Rhode Island Hospitality Association and the Greater Providence Chamber of Commerce. According to a published report, in 2014 at least 20 businesses in Rhode Island had been sued by patent trolls.
According to the RI Hospitality Association, which represents more than 650 restaurants, hotels and affiliated businesses, patent trolling is becoming more prevalent within the industry.
“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.”
“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,” said Laurie White, president of the Greater Providence Chamber of Commerce. “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.”
For more information, contact:
Daniel Trafford, Publicist
State House Room 20
Providence, RI 02903