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Attorneys general, general counsel hold frank discussion on patent trolls, Part 1

Roundtable brings state AGs, corporate GCs together on common ground

Nebraska Attorney General Jon Bruning

The innovation adoption lifecycle, which explains how fast people take to a new technology, can certainly be adapted to news stories as well. Some, who are on the cutting edge, have known about the so-called “patent troll” problem for years. But others, the media laggards, are just getting wind of it. That’s because it is a topic that has gained a great deal of traction, and it seems as if you cannot go a week without hearing about patent trolls on the news.

Perhaps the reason why the issue is getting such coverage is that the chaos created by patent trolls has shifted to affecting small business owners and consumers. And, when people’s wallets are directly impacted by an issue, that is when they take note. That is also when state government and big business decide to step up their consideration of the issue. 

As we have covered here on InsideCounsel, concerns about the behaviors of certain non-practicing entities (NPEs) have sparked action by both state attorneys general and general counsel. The interests of state government and big business to not always align, but in this case, each group feels that egregious behavior by trolls is a problem that needs addressing. 

The two groups came together in New York City on February 4 to discuss the topic of patent trolls in a roundtable format. Three state attorneys general took part: Bill Sorrell of Vermont and Jon Bruning of Nebraska were present at the event, while Roy Cooper of North Carolina joined via conference call. The event also had three general counsel participants: Thomas Sager from du Pont was in New York, while Alan Schoenbaum of Rackspace and Samuel Reeves of Walmart joined via phone. The event was moderated by Bernie Nash of the state attorneys general practice at Dickstein Shapiro.

Each participant told his “origin story,” outlining how he came to be made aware of the patent troll problem and why it was an important issue to consider. The attorneys general of the group noted that their primary concern was to protect consumers. Sorrell and Bruning each mentioned MPHJ Technologies, perhaps the most notorious NPE in operation in the U.S. today. They pointed out that the company’s practices are outrageous, sending out hundreds, perhaps thousands of demand letters to companies of all sizes. These letters contend that these businesses are infringing on patents related to scanning-to-email technology and demand payment. Bruning gave the example of an 80-year-old Alzheimer’s patient who received such a letter. While not mentioning MPHJ, Cooper, the former president of the National Association of Attorneys General, cited a similar company that sent threatening letters regarding Wi-Fi technology. This type of behavior, the attorneys general agreed, goes far beyond the normal scope of patent rights protection.

The general counsel who participated in the roundtable also spoke in terms of extremes. Reeves, speaking in his capacity of the GC of the world’s largest retailer, stated that Walmart relies on technology in the same way that small businesses do, and the rash of demand letters affect large and small businesses alike. Schoenbaum detailed the issue his company faced, as the cloud-computing firm initially decided to settle with NPE suits, only to decide to fight back rather then be labeled a “soft target.” Sager’s company, of course, holds tens od thousands of patents, and has a vested interest in this topic, and sees these lawsuits as a burden on the judicial system.

In part two of this story, we’ll discuss further remarks from all six panelists, including possible solutions to some of the most egregious problems.

 

Until then, check out the following patent troll stories:

Is patent trolling on the rise?

President Obama pushes Congress to pass anti-patent troll bill

Fee-shifting in patent cases: Will proposed legislation actually change anything?

Massachusetts Attorney General Martha Coakley looks to slay patent trolls

Managing Editor

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Rich Steeves

Richard P. Steeves is Managing Editor of InsideCounsel magazine, where he covers the intellectual property and compliance arenas. Rich earned a B.A. in English Literature...

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