Despite NJCJI’s testimony in opposition, on October 2, 2014 the Assembly Commerce Committee voted unanimously to advance A-2462, which would create a state court cause of action against persons who pursue a patent claim in bad faith.
As the following articles note, NJCJI was one of the few opponents of the bill at the hearing:
Michael Booth |New Jersey Law Journal
A committee of the New Jersey Legislature is urging passage of legislation that would make it easier for companies to fight off lawsuits filed by so-called “patent trolls.”
A New Jersey Assembly panel approved Thursday legislation aimed at preventing individuals or companies from making false patent infringement claims in the state.
NJCJI did not come to the decision to oppose the bill lightly. As proponents of an equitable and predictable civil justice system, NJCJI appreciates that meritless patent litigation and the significant costs it imposes on all New Jersey businesses is a concern. And we share the alarm over “patent trolls” who are taking advantage of the proliferation of patents, especially in the IT realm, to make meritless demands and threaten frivolous litigation. However, NJCJI does not support passing a state-level fix to the patent law system.
The proposed legislation would affect much more than just the bottom-feeders sending out meritless shake-down demand letters. Granted, legislatively defining the “patent troll” is a challenge. But the list of factors in this bill for the court to consider is really just a collection of characteristics that correlate with bad actors. The bill does not effectively define who is being targeted by this legislation and as a result it would have potentially wide-ranging and unpredictable application.
The lack of clarity and predictability in the legislation is especially dangerous when combined with the other penalties and enforcement mechanisms in the bill. The one-way fee-shifting and treble damages has the potential to distort the process by which property rights in patents are enforced – not just with respect to “trolls” but to patent holders generally. The bonding requirement in the legislation would also impose a particular burden on small companies and individuals who lack the resources to post a bond in order to defend their property interest.
NJCJI appreciates the concern over the impact of frivolous litigation, and we would welcome the opportunity to improve the incentive structure in the civil litigation system at the state level in general. Unfortunately, patent litigation is the one area where the remedy is best left to the legislative and judicial bodies with the constitutional capacity to address the underlying problems.
Please contact NJCJI’s Chief Counsel, Alida Kass, if you have questions about NJCJI’s position on this issue.
- Has the Court Killed the Trolls? Patent Law Expert Says Maybe: NJCJI, July 17, 2014.
- Thomas Edison Was a “Patent Troll”: Adam Mossoff in Slate, May 19, 2014.
- Supreme Court Revises Fee-Shifting Rules in Patent Cases: Weeding out Bad Actors in a Level Playing Field: Adam Mossoff and Brian O’Shaughnessy on the Licensing Executives Society Website, May 6, 2014.