When a non-practicing entity (NPE) accused 16,000 small businesses of violating its patent by merely emailing scanned documents, the New York attorney general cracked down, forcing a settlement. Then the FTC threatened to sue for deceptive trade practices—prompting the NPE to file a preemptive suit against the FTC. As NPEs (sometimes known as patent trolls) have grown more audacious, the drumbeat for action against them has grown, notes Scott Llewellyn, deputy chair of Morrison & Foerster's IP Litigation Group. There's been an onslaught of media coverage and a flurry of federal legislation, with one House bill passing by a large margin in December. In January, President Obama urged passage of a bill to reduce "needless litigation," and the White House announced further executive actions. The House bill awaits a Senate counterpart. Regardless of whether any bill reaches Obama's desk, this "sea change of opinion" could have a big impact on patent infringement cases, Llewellyn says, by "potentially changing how judges and juries look at these issues." Meanwhile, Llewellyn warns, "Be careful what you wish for, because the devil is in the details." Companies should think about the potential for unintended consequences before supporting any measure.
Keywords: Intellectual Property, NPE, patent
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