After Drew Curtis saw his website Fark.com gather a large, international following he found himself embroiled in a curious lawsuit alongside other Internet giants like Yahoo.
A growing number of companies nationwide, particularly Internet and other tech companies, have found themselves fending off questionable claims of patent infringement – and it’s costing companies billions of dollars annually, patent attorneys and lawmakers say.
Kentucky lawmaker Sen. Chris McDaniel, R-Taylor Mill, has filed a bill that he hopes will curb the practice known as “patent trolling.’
(For an OpEd that ran previously on BizLex.com about this legislation, click here.)
The practice has raised concerns across the country. Other states are considering legislation and President Barack Obama mentioned the need for patent reform in his State of the Union address in January.
For Curtis, ‘patent trolling’ forced him to spend a year defending his company from a claim. In 1999 the Lexington man founded Fark.com, which gathers news from around the world, puts a humorous spin on it and allows readers to comment. News websites that gather content and allow for comments have become a common on the Internet
But a company in an office park in Plano, Texas with the vague name of Gooseberry Natural Resources claimed it owned the rights to a “system and method for structured news release generation and distribution,” and as a result, the suit claimed Yahoo and Fark owed Gooseberry money.
Curtis likened the infringement claim to patenting phone calls over the Internet.
After about a year of legal wrangling, Curtis said he asked Gooseberry to show where he infringed the patent, and Gooseberry dropped the suit against Fark. Calls to Gooseberry’s attorney and to the inventors listed on the patent, Eileen Shapiro, of Cambridge, Mass., and Steven J. Mintz, Saddle River, N.J., were not returned.
“It is disbelief. Someone accuses you of something you didn’t do,” Curtis said. “In patent law, you have to prove you didn’t infringe. That’s hard. How do you prove something you didn’t infringe on? To get to the stage of the lawsuit, that amount of work to prove you didn’t infringe is a lot. The other side knows this and essentially is legally extorting you.”
Many other companies, when faced with fighting patent lawsuits that can cost $2 million or more, decide to settle rather than fight.
Kentucky at the forefront
If the General Assembly passes McDaniel’s bill, Kentucky will be the third state to pass a law to combat patent trolling, behind Vermont and Oregon.
“We’d be at the forefront nationwide,” McDaniel said. “The problem is bad enough that the president called for reform in his State of the Union. It is a huge issue inside of the high-tech industry.”
McDaniel’s bill would penalize anyone who makes a vague and false claim of patent infringement. The bill passed the Republican-controlled Senate but awaits a hearing in the Democratic-controlled House. Gov. Steve Beshear has not announced a position.
The bill wouldn’t change federal patent law or lawsuits but would seek to stop patent trolls before it ends up in a courtroom, McDaniel said. Some attorneys question whether states have the right to legislate anything governing patents.
McDaniel said his bill doesn’t touch patent law or the validity of patents, just bad-faith claims made in the state of Kentucky.