For Immediate Release - December 05, 2013

AG Coakley’s Statement on the Passage of the Innovation Act

Bill Aims to Protect Small Start-ups from Patent Trolls

BOSTON – Today, Attorney General Martha Coakley issued this statement after Congress passed the Innovation Act, a bill that aims to limit the damage “patent trolls” can have on small businesses.

“We are pleased that Congress has passed this bill to crack down on frivolous patent suits that can be particularly harmful to small businesses,” AG Coakley said. “Patent trolls impede our innovation economy, not just in Massachusetts, but throughout the country and we will continue to review state legislative and other solutions to address this significant problem as well.”

BACKGROUND

Abusive patent practices are closely linked to a business model known colloquially as “patent trolling.” A troll does not invent new technology, make or sell products, or provide services to clients. A troll buys patents from others and makes money solely by asserting infringement and extracting licensing fees and settlement payments.

AG Coakley has pledged to explore the issue further, in order to determine whether federal or state legislation could address this issue. She has also pledged to determine whether other legal remedies are available to fend off frivolous suits and protect Massachusetts businesses on the cutting edge of innovation. 

Defending a patent lawsuit can cost a small company hundreds of thousands of dollars, which is a huge hurdle for many startups and often forces those businesses to settle lawsuits regardless of whether the infringement claims would hold up in a court of law. 

Last month, AG Coakley toured LevelUp, a Boston-based company whose pay-by-phone system is growing rapidly, but has recently been forced to respond to inquiries searching for potential patent violations. LevelUp has already spent hundreds of thousands of dollars defending against three separate lawsuits, money that could have been used to grow the company and hire new employees.

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