Bill H.130

HOUSE DOCKET, NO. 1679 FILED ON: 1/19/2017

HOUSE . . . . . . . . . . . . . . . No. 130

By Mr. Arciero of Westford, a petition (accompanied by bill, House, No. 130) of James Arciero relative to assertions of patent infringement made in bad faith. Consumer Protection and Professional Licensure.

The Commonwealth of Massachusetts

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In the One Hundred and Ninetieth General Court
(2017-2018)

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An Act relative to bad faith assertions of patent infringement.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. The General Laws are hereby amended by inserting after chapter 93K the following new chapter:-

CHAPTER 93L

BAD FAITH ASSERTIONS OF PATENT INFRINGEMENT

Section 1. As used in this chapter, the following words shall have the following meanings unless the context clearly requires otherwise:-

“Assertion of patent infringement”, means (i) sending or delivering a demand letter to a target; (ii) threating a target with litigation asserting, alleging or claiming that the target has engaged in patent infringement; (iii) sending or delivering a demand letter to the customers of a target; or (iv) otherwise making claims or allegations, other than those made in litigation against a target, that a target has engaged in patent infringement or that a target should obtain a license to a patent in order to avoid litigation.

“Demand letter”, means a letter, e-mail, or other communication asserting, alleging or claiming that the target has engaged in patent infringement or that a target should obtain a license to a patent in order to avoid litigation, or any similar assertion.

“Person” shall include, where applicable, natural persons, corporations, trusts, partnerships, incorporated or unincorporated associations, and any other legal entity.

“Target”, means a person residing in, conducting substantial business in, or having its principal place of business in Massachusetts and with respect to whom an assertion of patent infringement is made.

Section 2. A person shall not make, in bad faith, an assertion of patent infringement.

(a) In determining whether a person has made an assertion of patent infringement in bad faith, a court may consider the following:

(1) The demand letter does not contain the following information:

(i) the patent number;

(ii) the name and address of the patent owner or owners and assignee or assignees, if any; and

(iii) factual allegations concerning the specific areas in which the target’s products, services, and technology infringe the patent or are covered by the claims in the patent.

(2) Prior to sending the demand letter, the person fails to conduct an analysis comparing the claims in the patent to the target’s products, services, and technology, or such an analysis was done but does not identify specific areas in which the products, services, and technology are covered by the claims in the patent.

(3) The demand letter lacks the information described in paragraph (1), the target requests the information, and the person fails to provide the information within a reasonable period of time.

(4) The demand letter demands payment of a license fee or response within an unreasonably short period of time.

(5) The person offers to license the patent for an amount that is not based on a reasonable estimate of the value of the license.

(6) (3) the patent has been held invalid or unenforceable in a final judgment or administrative decision. (7) The claim or assertion of patent infringement is deceptive.

(8) The communication falsely states that the sender has filed a lawsuit in connection with the claim;

(9) Any other factor the court deems relevant.

(b) A court may consider the following factors as evidence that a person has not made an assertion of patent infringement in bad faith:

(1) The demand letter contains the information described in paragraph (1) of this section.

(2) Where the demand letter lacks the information described in paragraph (1) and the target requests the information, the person provides the information within a reasonable period of time.

(3) The person engages in a good faith effort to establish that the target has infringed the patent and to negotiate an appropriate remedy.

(4) The person 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.

(5) The person is:

(i) the inventor or joint inventor of the patent or, in the case of a patent filed by and awarded to an assignee of the original inventor or joint inventor, is the original assignee; or

(ii) an institution of higher education or a technology transfer organization owned or affiliated with an institution of higher education.

Section 3.

(a) The Attorney General shall have the same authority under this chapter to make rules, conduct civil investigations, bring civil actions, and enter into assurances of discontinuance as provided under chapter 93A. If the Attorney General believes that a person has violated or is violating this chapter, the Attorney General may bring an action on behalf of the state to enjoin the person from violating this section. In addition to seeking an injunction, the Attorney General may request and the court may order any other relief that may be in the public interest, including:

(1) the imposition of a civil penalty in an amount not to exceed $50,000 for each violation of Section 2;

(2) an order requiring reimbursement to this state for the reasonable value of investigating and prosecuting a violation of Section 2; and

(3) an order requiring restitution to a victim for legal and professional expenses related to the violation.

(c) In an action arising under subsection (a) of this section, any person who has delivered or sent, or caused another to deliver or send, a demand to a target in Massachusetts has purposefully availed himself or herself of the privileges of conducting business in this State and shall be subject to suit in this State, whether or not the person is transacting or has transacted any other business in this State. This Chapter shall be construed as a special jurisdiction statute in accordance with section 3 of chapter 223A of the General Laws.

Section 4. This chapter shall not be construed to limit rights and remedies available to the Commonwealth of Massachusetts or to any person under any other law and shall not alter or restrict the Attorney General’s authority under chapter 93A with regard to conduct involving assertions of patent infringement. This section shall not prohibit a person who owns or has a right to license or enforce a patent from notifying others of the person's ownership or right; offering the patent to others for license or sale; notifying any person of the person's infringement of the patent as provided by United States Code, title 35, section 287; or seeking compensation for past or present infringement of the patent or for a license to the patent. This section shall not be construed to apply to a person who has demonstrated good faith business practices in previous efforts to enforce the patent, or a substantially similar patent, or who has successfully enforced the patent, or a substantially similar patent, through litigation.

(b) This section shall not apply to any written or electronic communication:

(1) sent by any owner of a patent who has engaged in substantial research, commercial development, production, manufacturing, processing, or delivery of products or materials related to the patent or substantially similar patents;

(2) sent by any institution of higher education;

(3) sent by a charitable institution under section 501(c)(3) of the Internal Revenue Code, and those within its control group as defined therein;

(4) sent by any technology transfer organization whose primary purpose is to facilitate the commercialization of technology developed by an institution of higher education or charitable institution under section 501(c)(3) of the Internal Revenue Code, and those within its control group as defined therein; or

(5) relating to a demand or assertion of patent infringement that arises under United States Code, title 35, section 271(e)(2); United States Code, title 21, section 355; or United States Code, title 42, section 262, and any civil action including such a demand or assertion.

Section 5. This section does not create a private cause of action for a violation of Section 2.

Name:	District/Address:	Date Added:
James Arciero	2nd Middlesex	1/19/2017