Law — Bill outlaws companies practice of purchasing patents and then intimidating people with threats of lawsuits, eliminates shakedowns

The Oregon Legislature passed a bill last week making Oregon the second state in the nation to outlaw “patent trolling.”

“Patent trolls are companies that purchase patents and intimidate thousands of individuals and small businesses with the threat of a lawsuit,” said Sen. Jackie Winters (R-Salem), who sponsored the bill and who is a retired small business owner. “The aim is to extort cash from companies or individuals in order to make the threat of litigation go away.”

For example, Winters said, “A patent troll (recently) sent letters to construction businesses across Oregon demanding a $150 licensing fee for the normal process of using fans to reduce moisture at a construction site.”

“Although some businesses ignore such shakedowns, others choose to pay up because it is cheaper than hiring an attorney to evaluate the claim,” she said. “This burden on our small businesses creates an unnecessary drag on Oregon’s economy and discourages job creation.”

Senate Bill 1540, unanimously passed by both the Senate and House, makes patent trolling an unlawful trade practice, which means the state Department of Justice can take action again companies doing this.

The bill would also allow those who have been targeted by a patent troll to sue for attorneys’ fees, Winters said.

The bill also includes a lengthy list of conditions that may be used to determine if patent trolling has occurred, including a demand that the recipient pay a license or other fee in an unreasonably short period of time, failure to include the patent number for the patent the recipient allegedly infringed and failure to compare the claims in the patent to the features or specifications of the recipient’s product, service or technology.

Vermont enacted a similar provision in 2013.

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