SENATE DOCKET, NO. 2024        FILED ON: 1/20/2017

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 153

The Commonwealth of Massachusetts

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PRESENTED BY:

Richard J. Ross

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act relative to bad faith assertions of patent infringement.

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PETITION OF:

SENATE DOCKET, NO. 2024        FILED ON: 1/20/2017

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 153

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, by alleging or claiming in a demand letter 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 in a demand letter, 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 written 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)  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.

(c) This section shall not apply to:

(1) any party who is currently making significant investments in:

(i) research and development, where development means technical or experimental work to create, test, qualify, modify, or validate technologies or processes for commercialization of goods or services;

(ii) manufacturing;

(iii) the provision of goods or commercial services; or

(iv) a combination of any of the areas of business described in clauses (i) through (iv);

(2) any party who has affiliated entities who "are currently" making significant investments in any of the areas of business described in subparagraph (A).

(3) any institution of higher education, public or private, or non-profit research institute, or an organization which has as one of its primary functions the management of inventions on behalf of the aforementioned entities.

Section 3. (a) A target of conduct involving assertions of patent infringement or a person aggrieved by a violation of this chapter may bring an action in Superior Court. A court may award the following remedies to a plaintiff who prevails in an action brought pursuant to this chapter:

(1) equitable relief;

(2) damages;

(3) costs and fees, including reasonable attorney’s fees; and

(4) exemplary damages in an amount equal to $50,000.00 or three times the total of damages, costs, and fees, whichever is greater.

(b) 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) or (b) 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.