The Assembly Commerce and Economic Development Committee approved a bipartisan measure Monday that aims to protect New Jersey companies from abusive, bad faith claims of patent infringement and the costly litigation that they warrant.
The bill would look to create guidelines for the courts to use in better identifying “patent trolls,” such as determining if a demand letter claiming infringement even contains the patent number in question and considering whether or not any analysis was performed by the accuser prior to issuing a demand letter.
"So-called patent trolls are usually the holders of vague patents, who do not use the protected technology themselves,” said Assemblyman Troy Singleton (D-Mount Laurel), the bill’s primary sponsor. “Instead, they demand payment from alleged infringers in the hope that their targets will settle rather than defend themselves in court. This legislation aims to curb this pattern of litigation by having certain requirements in place for the company to verify in terms of a potential infringement of an actual patent."
Requests for disclosure and written or electronic communication pertaining to a patent is excluded in the bill, as federal law currently authorizes both.
According to Assemblyman Anthony Bucco (R-Randolph), a cosponsor of the bill, the United States saw an all-time high of roughly 7,500 patent dispute cases last year.
“This corporate pirating is basically a 21st century shakedown that forces businesses to choose between costly litigation or ridiculous fees if they want the claim to go away,” said Bucco. “Businesses of all sizes can be targets, from a small local business up to a large high-tech firm. My legislation lists factors that a court may consider as evidence if a person has made a bad faith assertion of patent infringement.”
The bill, which will now head to the Assembly for full consideration, was first introduced in 2013.