The Rhode Island State House of Representatives passed legislation that prohibits so-called "patent trolls" in Rhode Island. The legislation (H 7425), filed on behalf of Attorney General Peter F. Kilmartin by House Corporation Committee Chairman Brian Kennedy (D, District 38 - Hopkinton, Westerly), prohibits a person or company from making bad faith assertions of patent infringement against a Rhode Island business or individual.
Last week, companion legislation (S 2542), sponsored by Senate Minority Leader Dennis L. Algiere (R, District 38 – Westerly, Charlestown, South Kingstown), passed the Senate unanimously.
The bill targets "patent trolls," which are 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 law would allow a business or individual 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 provides the Office of Attorney General the ability to pursue investigations and bring civil actions against patent trolls under antitrust law and the Deceptive Trade Practices Act.
"I commend Chairman Kennedy and Minority Leader Algiere for their work on this important, pro-business legislative action that will protect our small businesses from what are essentially boardroom shakedowns that exploit a loophole in our existing patent infringement laws," said Attorney General Kilmartin.
"This legislation will serve to rein 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 Chairman Kennedy.
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 July by PricewaterhouseCoopers, 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 the Rhode Island Hospitality Association and the Greater Providence Chamber of Commerce.