While it may not have reached critical mass yet, the momentum towards “doing something” about abusive patent litigation has definitely increased since WLF held its “Patent Assertion Entities” and Antitrust: The FTC/DOJ Inquiry and Underlying Legal Policy Issues program on May 30. Of course, just five days after our program, the President made his big splash about “patent trolls,” so that might have had something to do with the momentum as well.
A Taste of Their Own Medicine? On Tuesday, the American Public Transit Association (APTA) took legal action to protect its members and other government-run transportation entities from patent-assertion entities based in Luxembourg and the British Virgin Islands. APTA v. ArrivalStar and Melvino, filed in the Southern District of New York, seeks a declaratory judgment on the invalidity of the defendants’ patents, which allegedly cover arrival and status messaging systems that transit authorities use, and also claims that the Eleventh Amendment immunizes those transit entities from patent suits.
APTA’s complaint lists ten ArrivalStar lawsuits against transit authorities which led to quick settlements for amounts that were “well below the expected cost of litigation.” It also includes a sample “license our patent or else” letter (marked on each page “FOR SETTLEMENT PURPOSES ONLY” just in case the recipient didn’t get the message), which helpfully lists some of the “over 180” for-profit companies that have taken the licensing route with ArrivalStar.
FTC Chairwoman’s Announcement. At a June 20 program co-sponsored by CCIA and the Antitrust Institute, FTC Chairwoman Ramirez took what Lisa Kimmel discussed at WLF’s May 30 program one step further, announcing that she would encourage the Commission to pursue a formal “Section 6(b)” study of patent-assertion entities. She would need support from a majority of the Commissioners to initiate an investigation, and with the FTC populated by only four Commissioners at the moment, including one (Joshua Wright) who is skeptical of Section 5 enforcement, such a study isn’t a foregone conclusion. Chairwoman Ramirez’s statements garnered quite a bit of coverage and analysis, some of which the Patent Progress blog links to here.
Congressional Letter Writing. On the same day as the aforementioned program, Senate Judiciary Committee Chairman Patrick Leahy (not) coincidentally wrote to Chairwoman Ramirez encouraging her to “use aggressively the consumer protection and competition laws already in place.” Earlier this month, a bipartisan group of House Members led by Representatives Judy Chu and Blake Farenthold wrote to the Chairwoman supporting a deeper patent-assertion entity inquiry. And on June 25, Representative Daniel Lipinski sent a letter to Ramirez which focused on patent suits targeting public agencies. Representative Lipinski included a report, Trolling for a Public Trough: How Patent Assertion Entities Cost Taxpayers, which includes licensing demand letters and copies of complaints as exhibits.