The Rhode Island State Senate unanimously passed legislation that prohibits so-called "patent trolls" in Rhode Island. The legislation (S 2542), filed on behalf of Attorney General Peter F. Kilmartin by Senate Minority Leader Dennis L. Algiere (R, District 38 – Westerly, Charlestown, South Kingstown), would prohibit a person from making bad faith assertions of patent infringement against a Rhode Island business or individual.
"Patent trolls" are individuals or companies that acquire patents solely for the purpose of using them to extract license fees and settlements from those targeted as alleged infringers. Consumers, small businesses and non-profit agencies are often targeted by patent trolls because they have purchased or used products with a wide range of patented technology such as printers or scanners. The law would also allow a business or individual to bring action in Rhode Island Superior Court against the patent troll, where they may be awarded equitable relief, actual damages, costs, attorney's fees and exemplary damages.
The law also gives the Office of Attorney General civil investigative powers, including the ability to bring civil actions against patent trolls; if found to have made a bad faith assertion, the patent troll could face a maximum penalty of $250,000.
"The threat of a frivolous lawsuit, let alone the cost of litigation should a lawsuit ever be filed, can be devastating, particularly for small business owners and non-profit agencies. Patent trolls gamble on a small business simply paying the alleged license fee versus fighting the matter in a court of law. It's deceptive and a misuse of our current patent system. Rhode Island's small businesses have enough obstacles to success already. They cannot afford to be attacked by dubious patent trolls looking to make a quick buck," said Attorney General Peter Kilmartin. "I commend the Senate, especially Minority Leader Algiere, for passing common sense, pro- business legislation that protects Rhode Island companies from what are essentially boardroom shakedowns that exploit a loophole in our existing patent infringement laws"
"I have been working to get this valuable protection for businesses for the past few years," said Minority Leader Algiere, who has sponsored a version of the bill in past legislative sessions. "Small businesses face enough roadblocks without having to worry about predatory patent trolls and the potential cost of litigation to protect their businesses."
The House Judiciary voted to send companion legislation (H 7425) sponsored by Chair of the House Corporations Committee Representative Brian Kennedy (D, District 38 - Hopkinton, Westerly) to the House floor.
According to a report published by the Practicing Law Institute, frivolous patent litigation costs U.S. businesses approximately $29 billion a year in direct costs and $80 billion in indirect costs. And, according to a study published in July by PricewaterhouseCoopers, almost 6,500 patent lawsuits were filed in the United States in 2013, of which 67 percent of those lawsuits were filed by patent trolls.
The legislation has the support of the Rhode Island Hospitality Association and the Greater Providence Chamber of Commerce.