For Immediate Release - December 17, 2013

AG Coakley Supports Nationwide Investigation of ‘Patent Trolls’

Letter Sent to Federal Trade Commission Urging Protection of Small Businesses from Baseless Patent Infringement Harassment

BOSTON – In an effort to obtain a significant amount of data and information about “patent trolls,” Attorney General Martha Coakley and a coalition of states sent a letter to the Federal Trade Commission (FTC) to express support for its proposed nationwide investigation of patent enforcement abuse.

AG Coakley, along with 42 attorneys general, sent the letter today declaring that the federal agency’s proposed project will greatly assist enforcement efforts for both federal and state authorities.

“Patent trolls are a growing problem for our economy here in Massachusetts, and we believe this project will help better understand the business models and practices behind these frivolous lawsuits,” AG Coakley said.

Patent Assertion Entities (PAEs), also known as patent trolls, are commonly businesses that don’t invent or manufacture anything, but instead acquire broad patents with the aim of making money by asserting typically baseless claims of patent infringement to extract fees or settlements from companies. Small businesses, retailers, and non-profit organizations have been targeted in various states with demands for licensing fees for the use of common, everyday technology such as scanners and Wi-Fi networks. The patent troll business model works because defending patent infringement lawsuits is disastrously expensive for small businesses.

In early October, the FTC announced its plan to conduct a wide-ranging investigation of known patent trolls. The proposed investigation would arm consumer protection authorities with valuable intelligence as they escalate actions against abusers of the patent system. According to the letter, the collection of information will greatly assist enforcement efforts against patent trolls “where they are found to violate antitrust and unfair and deceptive trade practice laws.”

Several state attorneys general initiated innovative efforts this year to use existing unfair and deceptive trade practice laws to attack patent trolls. In November, AG Coakley announced that her office was exploring ways to end patent trolling during a tour of Boston startup LevelUp. She also pledged to review legislation that could address this issue, and determine whether other legal remedies are available to fend off frivolous suits and protect Massachusetts businesses on the cutting edge of innovation.          

Earlier this month, AG Coakley applauded Congress for passing the Innovation Act, a bill that aims to limit the damage “patent trolls” can have on small businesses.

According to the letter sent today, the FTC’s project “should yield a trove of information relevant to patent trolls’ practices, methods, and beliefs regarding the veracity (or lack thereof) of infringement claims, and the number and types of their target entities.”

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