In an effort to protect small business from scammers, the House Financial Institutions Committee held a public hearing on Senate Bill 706, sponsored by Sen. Mike Cunningham. The bill would prohibit bad faith assertions of patent infringement. This act creates a seven factor test that a court would consider when determining if a person has made a bad faith assertion of patent infringement.
If a person or business believes that they have been a target of a bad faith assertion of patent infringement upon receiving a demand letter, the person shall have a private right to a cause of action. Upon a finding by a court that a person has made a bad faith assertion of patent infringement, the court allows the target to recover certain damages.
“This is a new scam that is hitting banks and small businesses,” Sen. Cunningham testified. “People are trolling businesses and sending out letters to see who will bite at it. The letters are falsely claiming businesses are illegally using their patented software, and demanding they be paid for it. These trolls extort the companies by demanding they go to court or pay them off by employee, some companies have paid 50-60 thousand dollars because they’ve been threatened with lawsuits and told they could be paying millions of dollars.”
A similar bill, House Bill 1374, sponsored by Rep. Stanley Cox, was passed out of the House and has had a hearing in the Senate Judiciary, Civil and Criminal Jurisprudence Committee.
This bill would allow the Attorney General to investigate, restrain, and prosecute bad faith assertions of patent infringement claims. The bill was voted do pass by the committee and now moves to the House floor for debate.
The Missouri Chamber is supportive of this legislation.