Patent Infringement Protection Against Bad Faith Claims

Gone are the days of being up against the wall dealing with an unreasonable NPE (non-practicing entity) making unsupported claims of patent infringement.  A bill has been introduced in the state of Michigan that could level the playing field for those accused of patent infringement.  The bill, labeled the "Bad Faith Patent Infringement Claims Act” (Michigan HB 5701), aims to prevent Michigan businesses from being held hostage to unreasonable ransom demands by NPEs, for fear of incurring high litigation defense expenses.  The reality is that patent litigation is expensive - even when you have to defend against infringement claims wholly lacking in merit.  Due to the high cost of patent litigation, some companies have been forced to settle and/or pay licensing fees, even where it was likely that they did not infringe or the patent was invalid.  This new bill contemporaneously follows a national trend of backlash against baseless infringement claims and aims to remedy this unfortunate reality.  The bill, introduced by Rep. Mike Carlton in July 2014, provides a new state law claim against bad faith patent infringement accusations.  In this Michigan proposal, bad faith may be determined by weighing several enumerated factors, but basically boils down to a sending a bad demand letter.