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Patent Trolling In South Carolina




Some pretty powerful forces are massing in South Carolina over a piece of legislation aimed at blocking patent trolls.

Wait … what in the hell is a “patent troll?”

Glad you asked. A patent troll is a company that exists for the sole purpose of targeting businesses with aggressive litigation over … well, patents. Do the patent trolls actually produce anything? Like a product or a service? Of course not. They’re what are referred to in the business as NPE’s – or “non-practicing entities.” They don’t make anything – nor do they have any intention of ever making anything. Their purpose is extorting money from target defendants – threatening them with costly lawsuits (often without evidence of infringement).

How does it work?

Easy: Patent trolls send “demand letters” to their targets knowing they cannot afford to litigate against any action brought against them. Whether the recipient decides to settle out of court or fight the allegation before a judge and jury – the patent trolls always win. Business is booming, too, as a recent University of Boston study found that patent trolling cost the U.S. economy $29 billion in 2011.

Attempting to block patent trolls in the Palmetto State is S.C. Rep. Kirkman Finlay (R-S.C.). Finlay has introduced legislation – H. 4371 – which would provide protections against these abusive entities.

Finlay’s legislation – which mirrors bills being advanced in Alabama, Georgia, North Carolina, Tennessee and Virginia – doesn’t address the validity of the patents in question, it simply creates a “bad faith” cause of action related to certain assertions of patent infringement. In other words a legitimate company whose patent has been violated by a competitor would still be able to sue and collect damages.

Patent trolls, on the other hand, would be out of luck …

Finlay’s bill passed the S.C. House and has cleared a committee in the State Senate. Unfortunately, after it left the Senate committee a powerful special interest – the S.C. Manufacturers’ Alliance – began supplying language to Senators and staff endeavoring to create a “safe harbor” for patent trolls in our state.

Not only that the language the manufacturers’ offered was reportedly tied to Caterpillar – a company that’s in the process of ditching South Carolina.

We understand the need for businesses to protect their proprietary information – and the inventions and processes that enable them to make profits and create jobs. But the patent troll “industry” isn’t about protecting such businesses (or their jobs) – its about attacking businesses that aren’t big enough to defend themselves.

Accordingly, we urge Senators to pass Finlay’s original bill and reject efforts by special interests to water down its protections.

UPDATE: Want to learn more about this issue? We were just forwarded a few videos explaining more about this issue. Take a look …

What is Patent Trolling?

An example of Patent Trolling …

What can be done to stop patent trolling in SC?