Across the United States, two-thirds of all states have introduced legislation that targets bad faith patent assertion by entities like MPHJ and Shipping and Transit. Massachusetts State Sen. Eric Lesser and State Rep. Lori Ehrlich are trying to make Massachusetts the most recent state to join this club.
Lesser and Ehrlich recently re-introduced their bad faith assertion bill that would allow victims of bad faith patent assertions to recover reasonable attorney’s fees and other costs incurred in defending themselves from a bad faith assertion. By allowing recovery of defense fees against these sorts of plaintiffs, Lesser and Ehrlich hope to protect innovation against fraudulent and bad faith assertions.
Companies like MPHJ and Shipping and Transit would send out hundreds or thousands of demand letters (each of which might wind up costing a recipient tens of thousands of dollars), offering to license their patents for far less than the cost of defending against a patent litigation. The increasing prevalence of this tactic led Vermont’s Attorney General to take the fight to the trolls. (Ultimately, another critical legal tool, inter partes review, was required to fully defang MPHJ—a tool which some U.S. Senators are trying to heavily restrict, harming the patent system overall.)
Despite the failure of MPHJ and Shipping and Transit, this type of bill is still necessary—at least one NPE, Landmark Technology, continues to engage in very similar behavior, sending letters threatening litigation and offering a license for $40,000 or $65,000—far less than the million or more that defense might cost.
One recipient of a lawsuit from Landmark? Canton, MA-based business DestinationXL (formerly Casual Male Retail Group), a retailer and e-commerce seller of big and tall menswear. Had Lesser and Ehrlich’s bill been in place when DestinationXL was sued in 2013, it might have enabled them to fight the allegations, rather than being forced to settle.