BOISE, Idaho (4/14/14)--With lobbying support from the Idaho Credit Union League, Idaho Gov. Butch Otter last week signed legislation to protect credit unions from so-called patent trolls (
The Idaho Statesman
Patent law reforms to address "trolls" is a significant issue for credit unions and is seeing a lot of attention from lawmakers on both the federal and state levels.
Without actually inventing anything or adding to innovation, patent trolls buy up patents in order to extract fees--or legal settlements--from other companies that may use that technology. Small companies such as credit unions find themselves between a rock and a hard place: paying what amounts to extorted fees may be cheaper than fighting the trolls in court.
The Idaho law defines bad-faith patent litigation threats as any of the following:
- A letter threatening patent infringement litigation but lacks the patent number or name and address of the sender;
- The letter demands payment for a license fee or a response in an unreasonably short period of time;
- The person offers to license the patent for an amount that is not reasonably based on the value of the license to the patent; and
- When a reasonable person would recognize that a person's claim of patent infringement had no merit.
Other states that have enacted legislation include Alabama, Idaho, Oregon, South Dakota and Utah.
States with pending legislation include: Connecticut, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Missouri, Nebraska, New Hampshire, New Jersey, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Virginia and Wisconsin.
On the federal level, Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) has introduced the Patent Transparency and Improvements Act of 2013 (S. 1720), which would aid credit unions and other businesses that have been targeted by patent trolls.
The Credit Union National Association supports support the demand-letter language within S. 1720, which would aid credit unions and other businesses that have been targeted with financial threats through demand letters by bad actors who have been come to be referred to as "patent trolls."
Last week, Attorney General Bill Sorrell, at the request of U.S. Rep. Peter Welch (D-Vt.), testified before a subcommittee of the U.S. House of Representatives' Committee on Energy and Commerce to urge Congress to take steps to address the patent troll issue, the Association of Vermont Credit Unions reported. In addition to better understanding the problem, the goal of the hearing was to explore ways to prevent abusive patent demand letters, while preserving the right of legitimate businesses to use demand letters to negotiate licenses to their inventions (