Georgia Seeks to Stop Patent Trolls

            On July 1, 2014, a new Georgia law went into effect that seeks to limit the activities of “patent trolls.” HB 809 acts to protect entrepreneurs from meritless demand letters by individuals or entities that buy large groups of patents but never intend to develop or market a product. Instead, “patent trolls,” as they have come to be known, simply threaten expensive and drawn out legal action via “demand letters” against people they assert are violating their patents. The demand letters typically demand large settlements in a short amount of time as a way of preventing further legal action.

            HB 809 discourages such demand letters from patent trolls in several ways. First, under the law, demand letters must be made in “good faith.” Otherwise the person sending the demand may be required to post a bond “in an amount equal to a good faith estimate of the target's expenses of litigation,” including attorneys fees. Secondly, whether a demand letter is made in good faith hinges on several factors, including:

(1) whether the author of the demand letter makes a substantial investment in the use of the patent or in the production or sale of a product or item covered by the patent and

(2) whether the author of the demand letter has demonstrated good faith business practices in previous efforts to enforce the patent, or a substantially similar patent.

            Bills similar to HB 809 have recently been enacted throughout the country, partially in connection with the recent advent of podcasting. Podcasts have become an increasingly popular form of entertainment in the past several years and a group called Personal Audio has filed suit against several of the biggest names in podcasting, claiming ownership over several patents related to podcasting. It should be noted that Personal Audio does not create podcasts or work in the podcasting industry, it simply claims to own the underlying patents related to the platform.

            The future of patent trolling, particularly in response to bills like HB 809, will be interesting to watch as it plays out in the court system over the next few years.

 

The full text of HB 809 can be found here:

http://www.legis.ga.gov/Legislation/20132014/143216.pdf

 

More info on patent trolls and the world of podcasting can be found here:

http://www.economist.com/blogs/babbage/2014/03/intellectual-property