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Targeting Rogue and Opaque Letters (TROL) Act (view source)
Revision as of 15:08, 2 September 2016
, 15:08, 2 September 2016no edit summary
Return to [[Innovation Policy#Patent Reform|Patent Reform]]
'''H.R.2045: Targeting Rogue and Opaque Letters (TROL) Act (2015)'''
==Summary==
*Requires demand letters to include specific details about the person with the rights of the patent, parent companies, contact information, and information on how the recipient is infringing the patent
*Establishes that sending demand letters that misrepresent patent rights is an unfair or deceptive act or practice under the FTC Federal Trade Commission Act and allows the Federal Trade Commission (FTC ) and State Attorneys General to fine violators
*Directs the Federal Trade Commission, and authorizes state attorneys general, to enforce against written communications (commonly referred to as demand letters) that represent in bad faith that the recipient bears liability or owes compensation for infringing an asserted patent. Requires the pattern or practice of sending such bad faith demand letters to be treated as an unfair or deceptive act or practice in violation of the Federal Trade Commission Act.
**Bad faith is defined as "'clear and convincing evidence' that the infringement assertions are 'objectively baseless' to avoid dismissal on summary judgment or a motion to dismiss"[http://patentlyo.com/patent/2013/05/what-is-happening-in-vermont-patent-law-reform-from-the-bottom-up.html]
*Sets forth the types of bad faith representations, compensation requests, or omissions that are considered to be unfair or deceptive.
*Provides an affirmative defense if the sender can show that statements, representations, or omissions were mistakes made in good faith, which may be demonstrated by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.
==Reactions==
===Dissenting===
*A reply to the letter written by 51 scholars in support of restricting patent litigation states that studies claiming large problems with patent litigation misconstrue the issues. Adam Mossoff is one of the co-authors for the reply letter. [http://cpip.gmu.edu/wp-content/uploads/2015/03/Economists-Law-Profs-Letter-re-Patent-Reform.pdf][http://patentlyo.com/patent/2015/03/professor-patent-reform.html] *The Electronic Frontier Foundation (EFF) has stated that TROL act does not do enough in regard to patent reform for reasons listed below:#TROL Act provides FTC power it already has to pursue patent trolls#TROL Act would strike down state laws on patent reform
==Similar Legislation(State Level)==
Several states have passed legislation combating "patent trolls" by specifically targeting demand letters written in bad faith. [http://www.forbes.com/sites/ericgoldman/2013/05/22/vermont-enacts-the-nations-first-anti-patent-trolling-law/#66a17f406dfe Vermont] became the first state to pass a bad faith demand letter bill. State legislators of [http://arstechnica.com/tech-policy/2014/01/nebraska-ag-seeks-to-shut-down-vague-patent-demand-letters/ Nebraska], [http://legalnewsline.com/stories/510517105-oregon-lawmaker-lauds-passing-of-patent-troll-bill-says-it-will-give-ag-more-tools Oregon], and [http://legalnewsline.com/stories/510517035-kentucky-introduces-its-own-bill-to-combat-patent-trolls Kentucky] have introduced similar pieces of legislation.
Hrdy (2013) argues for state patents over U.S. patents to boost innovation spillover and encouraging patent reform from the bottom up.[http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2259368]
==Demand Letters==
Quantifying the number of demand letters may feel like a Sisyphean task. The nature of demand letters creates a private relationship between a Patent Assertion Entity (PAE) or a law firm representing them and the company that allegedly infringed on a patent. These letters are mailed directly to the alleged infringer, and do not fall under a required part of discovery in the event of a lawsuit. Letters may warn or threaten a lawsuit from the PAE, but are not legally binding documents. Although the official number of demand letters related to patent infringements does not exist, several online resources host example of demand letters.
*[https://trollingeffects.org Trolling Effects]
The website Trolling Effects hosts a [https://trollingeffects.org/letters collection] of demand letters. As of March 7, 2016, 54 demand letters from 2008 to 2015 are available. Of those, eight are from subsidiaries of MPHJ Technology Investments, LLC.
===Costs to Economy===
Bessen & Meurer (2012) estimate that patent asserting entitites non-practicing entities have accrued $29 million of direct costs to businesses during 2011.[http://www.pcworld.com/article/258395/patent_trolls_cost_tech_companies_29_billion_last_year_study_says.html][http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2091210##] "The authors used a database of 1,630 patent troll lawsuits compiled by Patent Freedom. Because many of the lawsuits had multiple defendants, there was a total of 4,114 plaintiff-defendant pairs. The median defendant over all of these pairs lost $20.4 million in market capitalization, while the mean loss was $122 million."[http://arstechnica.com/tech-policy/2011/09/study-patent-trolls-have-cost-innovators-half-a-trillion-bucks/]
The two Boston University faculty members have also published a book, ''Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk'' [http://www.amazon.com/Patent-Failure-Bureaucrats-Lawyers-Innovators/dp/069113491X/arstech-20], where they claim patent trolls "cost publicly traded defendants $500 billion since 1990."[http://arstechnica.com/tech-policy/2011/09/study-patent-trolls-have-cost-innovators-half-a-trillion-bucks/]
==MPHJ Technology Investments, LLC==
One of the biggest motivations behind the TROL Act is the 2014 Federal Trade Commission investigation into MPHJ Technology Investments, LLC (MPHJ). The investigation revealed that MPHJ had sent demand letters to "16,465 small businesses located in all fifty states and the District of Columbia."[https://www.ftc.gov/system/files/documents/cases/150317mphjtechcmpt.pdf]
[[Category: Public]]
[[Public Classification::Legislation| ]]
