Legislation designed to deter “bad faith” patent claims is expected to be considered on the floor of the state House on Thursday after being endorsed by a judiciary committee.
No opposition surfaced in the committee, which pushed the bill forward by a voice vote on Tuesday. The bill, which has broad support from the business community, previously was endorsed by the House Commerce and Job Development Committee.
The bill sponsored by Rep. Tom Murry, a Morrisville Republican, targets so-called patent trolls that victimize companies with frivolous patent claims. Companies often settle those claims rather than going to court because of the high cost of patent litigation, even when they are confident the claims have no merit.
Patent trolls — the less-derogatory name is nonpracticing entitites, or NPEs — don’t make any products or provide any services. But they do own patents, and their business model consists solely of pursuing patent infringement claims against other businesses.
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Under the bill, companies targeted by NPEs in bad faith could seek attorney’s fees and damages in state court, and the people behind the NPEs could be personally liable for any awards. It also contains measures that would deter NPEs from sending “demand letters,” which often precede lawsuits, that accuse companies of infringing on a patent and demanding that they license the invention.
Rep. Paul Stam, a Republican from Apex, talked about offering an amendment to the bill on the House floor. Stam said he felt that targets of NPEs that make bad-faith moves of their own should also be liable for attorney’s fees and damages.
“It shouldn’t be one-way,” he said.
Some legislators questioned whether such an amendment is necessary given a judge’s ability to impose sanctions.
Murry said afterward that he wouldn’t object to an amendment “clarifying” the situation.
“At the end of the day, we don’t want bad faith on either side,” he said.
The Senate version of the bill is included in a broader tort reform measure that a judiciary committee has discussed but hasn’t acted upon.