Governor Peter Shumlin this morning signed into law a bill that seeks to protect Vermont companies from abusive and bad faith assertions of patent infringement, further encouraging the growth of knowledge-based businesses in Vermont. The governor signed the patent trolling prevention bill in front of an enthusiastic group of business leaders during the opening ceremonies of the Vermont Chamber Business & Industry EXPO. The Vermont attorney general immediately filed suit against one such alleged company.
"This bill will help to protect our good Vermont businesses from unscrupulous patent trolls who take advantage of them through bad faith claims of patent infringement," Shumlin said. "It will help us grow jobs."
"Patent trolls" make frivolous patent infringement claims, forcing companies to engage in protracted litigation, or pay settlement fees -- funds that would otherwise be allocated to research and development, job growth, capital improvements or other investments that could be used to grow businesses and stimulate the Vermont economy. Vermont is the first state in the nation to make the practice of patent trolling a violation of state law.
Attorney General Sorrell, left, listens as Governor Shumlin speaks about Vermont's first-in-the-nation patent protection law.
In an effort to protect Vermont’s small businesses and non-profit organizations, Attorney General Bill Sorrell filed a first-of-its-kind lawsuit today against MPHJ Technology Investments, LLC. It marks the first time that a state attorney general has filed suit against a so-called ‘patent troll.’The complaint alleges that MPHJ Technology has engaged in unfair and deceptive acts under Vermont’s Consumer Protection Act.
MPHJ Technology claims to have a patent on the process of scanning documents and attaching them to email via a network. The Attorney General’s complaint alleges that the company has sent letters containing multiple deceptive statements and demanding about $1,000 per employee, to many Vermont small businesses as part of a nationwide campaign. At least two of those businesses are non-profits that assist developmentally disabled Vermonters.
Patent trolling is a national problem. A recent major study out of Boston University estimated the cost of patent trolling on the US economy at $29 billion in 2011 alone. Representative Peter Welch recently co-sponsored the Saving High-Tech Innovators from Egregious Legal Disputes (’SHIELD’) Act of 2013 in Congress to address the problem and the Federal Trade Commission held a workshop to address patent trolling in December 2012.
"This new law will allow Vermont companies to fight back against patent trolls who send extortionate demand letters or initiate extortionate patent litigation," said Peter Kunin, an attorney in the intellectual property practice at Downs Rachlin Martin PLLC, a Vermont law firm with a significant practice in intellectual property law and patent litigation. Kunin and colleague, Eric Poehlman, worked with an ad-hoc group of business and government leaders to define the legal framework behind the bill.
Vermont is home to a range of technology and consumer products companies that are innovating in technology, developing and exporting hardware, software and e-commerce solutions to businesses around the world. The State of Vermont has developed a track record for encouraging these knowledge-based and e-commerce businesses to locate to the Green Mountain state. In addition to the anti-patent troll legislation, the state has:
Adopted a research and development tax credit;
Established a technology loan program at the Vermont Economic Development Authority for high-tech firms;
Offered STEM (science, technology, engineering and math) hiring incentives for recent college graduates; and
Encouraged workforce development in the technology field through new incentives in higher education.
"With the passage of this groundbreaking legislation we continue to make Vermont a great place to start and grow a business," said Betsy Bishop, president of the Vermont Chamber of Commerce.
BURLINGTON, VERMONT (May 22, 2013) --TOP PHOTO : Betsy Bishop watches as Governor Shumlin signs the patent protection bill into law.