By SEMA Washington, D.C., Staff
The U.S. House of Representatives’ Commerce, Manufacturing & Trade Subcommittee passed legislation targeting “patent trolls” that defraud unsuspecting businesses by falsely asserting patent rights. The trolls frequently purchase patents for goods and services they have no plans of producing and then send “demand” letters to companies seeking royalties and threatening patent infringement lawsuits. The trolls may also claim patent rights to common technologies or business practices whereby companies settle the claim rather than risk court action, providing funds to encourage more trolling.
While 20 states have laws to protect businesses and individuals against entities engaging in this deceptive practice, there is no federal standard at present. The legislation advancing in Congress outlines unfair and deceptive acts, provides the Federal Trade Commission with authority to investigate abusive practices and enforce the proposed law, and creates civil penalties of up to $5 million for related violations. The bill now goes to the House Energy and Commerce Committee for its consideration.
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