Governor Quinn Signs New Law Targeting Patent Trolls

patent trolls, Illinois business law attorney, small business owners, Gierach Law Firm, patent trollingPatent trolling is the process of sending misleading demand letters to a business and claiming that the business committed some act that violated the patent owned by another business or person. The letters typically demand that the business either cease the allegedly illegal patent violation or that the business pay royalty fees for continued use of the patent and avoidance of legal action.

The senders of these letters sometimes do not actually have legal claim to the underlying patent, and are simply attempting to extort small business owners through the threat of legal actions that the accuser would not legally be allowed to bring. Oftentimes even the name of the actual sender of the demand letter, and the party claiming patent infringement, is not included in the request.

Under Illinois Senate Bill 3405 (SB 3405), which was signed by Gov. Pat Quinn at the beginning of September, any person sending demand letters about patent infringement must have an actual legal claim that is valid or that sender will find him or herself subject to sanctions for engaging in a deceptive business practice. Recent cases in the news about patent trolling have brought attention to this serious issue that causes small business owners to determine whether they should just pay up or potentially face expensive legal battles in order to defend their lawful use of a patent.

SB. 3405 and the Protections it Provides for Small Business Owners

SB. 3405 was presented by Senator Daniel Bliss of Evanston. The law makes it a civil violation to demand royalty payments for patent use when the demander does not actually hold the patent or falsely represents that he or she is the patent holder. This rule also applies when a patent has been expired or overturned in court.

Also made illegal by the law is the use of written and/or email communications to falsely accuse another of patent violation when the accusation is used with the intent of forcing the accused party into a settlement agreement. SB 3405 specifically prohibits persons from claiming that judicial and/or administrative relief will be sought if activity does not cease, if compensation is not paid, and if the accuser does not have the legal right to make such claims. The accuser cannot falsely state that litigation and other proceedings regarding infringement of the patent have already commenced.

The new law serves the purpose of still allowing legal patent holders to exercise and protect their rights to lawfully owned patents. However, it finally provides protection to small businesses that have been exploited by big companies, as well as fraudsters looking to gain money by claiming false legal rights to patents that they do not own. By making patent trolling practices officially illegal, small businesses that are not in the financial position to hire pricey legal teams to protect their business and its reputation from patent fraud will finally be able to receive the relief that they deserve.

If you have concerns about your business, please contact the Naperville small business law attorneys at the Gierach Law Firm for business law-related legal assistance. We can discuss the specifics of your case and begin working immediately.