September 5, 2014
On August 26, 2014, Illinois joined the growing list of states that have enacted legislation intended to restrict aggressive patent assertion letters—targeting so-called “patent trolls” with S.B. 3405 (now Public Law 98-1119). The text of the law amends the existing Illinois Consumer Fraud and Deceptive Business Practice Act (815 ILCS 505) (the CFDBPA), and loosely tracks the text of the original anti-patent troll law adopted by Vermont on May 22, 2013 (i.e., Act 44). The CFDBPA regulates a variety of business practices relating, among other things, to door-to-door sales, debt collection, advertisements for repair services, and solicitation of business using prizes or gratuities. The law takes effect on January 1, 2015, and requires, inter alia, that patent assertion letters directed to certain types of Illinois parties must include the following:
1. The identity of the person asserting the right to license or enforce the patent
2. The patent alleged to have been infringed
3. Factual allegations concerning the specific areas in which the intended recipients infringe the patent or are covered by the claims of the patent
Like many of the laws passed in other states, the Illinois law also makes it unlawful to (a) make a false threat of litigation, (b) falsely assert that litigation has been filed against the intended recipient, and (c) make assertions that lack a reasonable basis in law, e.g., the rights to enforce the patents are held by someone other than the asserting party, the patent has been held invalid, or the patent has expired.
The Illinois law differs in some respects from similar “anti-troll” laws passed in other states as well. The Illinois law does not detail what constitutes “factual allegations” sufficient to satisfy item 3 above. Specifically, the law does not explicitly require patent assertion letters to specify each claim being asserted, to include claim charts, or to identify other pending or completed court or administrative proceedings involving the asserted patent. The Illinois law also differs because it is silent regarding assertion letters relating to pending applications.
The new law applies primarily to patent assertion letters directed at end users, i.e., persons who purchase, rent, lease, or otherwise obtain a product or service in the commercial market. The CFDBPA grants authority to the attorney general to investigate complaints under the CFDBPA and to bring suit in civil court for equitable relief, restitution to victims, and/or civil penalties. The CFDBPA caps civil penalties at $50,000, plus an additional $50,000 if the unlawful act was entered into with the intent to defraud. Additional penalties might accrue if the intended recipient of a patent assertion letter was a senior citizen. The CFDBPA also provides a cause of action for the intended recipients of patent assertion letters for damages that result from the receipt of such a letter, including attorney’s fees and costs.
The new Illinois law is of somewhat limited scope. Nonetheless, those sending assertion letters should be mindful of the provisions of this new law, especially given the apparent desire by some state governments to prosecute non-practicing entities who violate such laws. In addition, those people and businesses who receive patent assertion letters should be aware of the new law.
Fitch Even will host a free webinar on “Asserting Patents and Responding to Threats in the Age of State Anti-Troll Legislation” on September 25, 2014. This webinar will review similar state legislation from around the United States and will address strategic concerns for parties sending and receiving patent assertion letters. For more information and to register, please see the webinar listing.
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