An Act Relating to Bad Faith Claims of Patent Infringement

An Act Relating to Bad Faith Claims of Patent Infringement-Providing a Civil Penalty is a final model policy considered by ALEC's Federalism and International Relations Task Force at the States and Nation Policy Summit on December 2, 2016. Due to incomplete information, it is not known if the bill passed in a vote by legislators and lobbyists at ALEC task force meetings, if ALEC sought to distance itself from the bill as the public increased scrutiny of its pay-to-play activities, or if key operative language from the bill has been introduced by an ALEC legislator in a state legislature in the ensuing period or became binding law.

ALEC Bill Text

Summary

This Act seeks to provide a civil remedy for recipients of abusive or bad faith patent enforcement communications. It balances the rights of the consumers and businesses to be defended from abusive patent practices, particularly mass demand letters while protecting the rights of patent holders which are rooted in Article 1 Section 8 of the U.S. Constitution.

AN ACT RELATING TO BAD FAITH CLAIMS OF PATENT INFRINGEMENT – PROVIDING A CIVIL PENALTY

Model Policy

Be it enacted by the Legislature of the State of [INSERT STATE]: [INSERT RELEVANT SECTION OF RELEVANT STATE-SPECIFIC CODE] is amended to read as follows:

BAD FAITH CLAIMS OF PATENT INFRINGEMENT

DEFINITION: “End user” means a person that purchases, rents, leases or otherwise obtains a product, service or technology in the commercial market that is not for resale and that is or later becomes the subject of a patent infringement assertion due to the person’s use of the product, service or technology.

BAD FAITH CLAIM OF PATENT INFRINGEMENT PROHIBITED.

A person may not send to an end user located or doing business in this state a written or electronic communication that is a bad faith claim of patent infringement. A communication is a bad faith claim of patent infringement if the communication includes a claim that the end user or a person affiliated with the end user has infringed a patent and is liable for that infringement and: The communication falsely states that the sender has filed a lawsuit in connection with the claim; The claim is objectively baseless because: The sender or a person the sender represents does not have a current right to license the patent to or enforce the patent against the end user; The patent has been held invalid or unenforceable in a final judgment or administrative decision; or The infringing activity alleged in the communication occurred after the patent expired; or The communication is likely to materially mislead a reasonable end user because the communication does not contain information sufficient to inform the end user of: The identity of the person asserting the claim; The patent that is alleged to have been infringed; and At least one product, service or technology obtained by the end user that is alleged to infringe the patent or the activity of the end user that is alleged to infringe the patent. ENFORCEMENT BY ATTORNEY GENERAL; INJUNCTION AND CIVIL PENALTY

(a) If the attorney general believes that a person has violated or is violating [INSERT RELEVANT SECTION OF RELEVANT STATE-SPECIFIC CODE], the attorney general may bring an action on behalf of the state to enjoin the person from violating that section.

(b) In addition to seeking an injunction under Subsection (a), the attorney general may request and the court may order any other relief that may be in the public interest, including:

1) the imposition of a civil penalty in an amount not to exceed $50,000 for each violation of [INSERT RELEVANT SECTION OF RELEVANT STATE-SPECIFIC CODE];

2) an order requiring reimbursement to this state for the reasonable value of investigating and prosecuting a violation of [INSERT RELEVANT SECTION OF RELEVANT STATE-SPECIFIC CODE]; and

3) an order requiring restitution to a victim for legal and professional expenses related to the violation.

This Act may not be construed to:

limit rights and remedies available to the state or another person under any other law; alter or restrict the attorney general’s authority under other law with regard to conduct involving claims of patent infringement; or prohibit a person who owns or has a right to license or enforce a patent from: notifying others of the person’s ownership or right; offering the patent to others for license or sale; notifying any person of the person’s infringement of the patent as provided by 35 U.S.C. Section 287; or seeking compensation for past or present infringement of the patent or for a license to the patent. NO PRIVATE CAUSE OF ACTION

This Act does not create a private cause of action for a violation of [INSERT RELEVANT SECTION OF RELEVANT STATE-SPECIFIC CODE].

This Act takes effect [INSERT RELEVANT DATE].