Last week, the Wisconsin state Assembly voted to approve a bill designed to rein in abusive assertions of patent infringement against companies doing business in Wisconsin and their customers.  The bill was approved by the Wisconsin state Senate earlier this month, and will now be presented to the governor for signature.

As we discusssed in a prior post, Virginia, Oregon and Vermont have passed similar bills, and the Nebraska Attorney General has attempted to enforce that state’s general consumer protection and unfair competition laws against alleged bad faith assertions of patent infringement.

While the Wisconsin legislature was apparently targeting non-practicing entities (what some refer to as “patent trolls”), the text of the bill applies, with limited exceptions, to all individuals or entities who attempt to enforce patents or patent applications against entities doing business in Wisconsin or their customers.  Exempt from the bill’s reach are:

  • Claims of infringement by institutions of higher education (or a technology transfer organization that is owned, controlled or operated by, or associated with, an insitution of higher education);
  • Claims of infringement of a patent on a device or a component of a device that is regulated by the U.S. Food and Drug Administration (FDA) or the U.S.  Department of Agriculture; and
  • Communications attempting to enforce or assert a right arising under certain provisions of federal law, namely 35 U.S.C. § 271(e)(2) (patent infringement by submitting specified types of applications under the Food, Drug, and Cosmetic Act) or 42 U.S.C. § 262 (introduction of specified types of projects without a biological products license).

The bill regulates written communications, called “patent notifications,” by patent holders or licensees that attempt to enforce or assert rights in connection with a patent or pending patent application.  The bill’s provisions are implicated if a patent notification is sent to a “target,” defined as an individual or entity that is domiciled in or does substantial business in Wisconsin or customers of such individuals or entities.

The bill, if enacted into law, would require patent notifications to contain:

1.  The number of each patent or patent application that is the subject of the patent notification;

2.  A physical or electronic copy of each patent or pending patent application;

3.  The name and physical address of the owner of each patent or pending patent application and all other persons having a right to enforce the patent or pending patent application;

4.  An identification of each claim of each patent or pending patent application being asserted as well as the target’s product, service, process, or technology to which that claim relates;

5.  Factual allegations and an analysis setting forth in detail the patent holder’s theory of each claim identified in the notification and how that claim relates to the target’s product, service, process, or technology; and

6.  An identification of each pending or completed court or administrative proceeding, including any proceeding before the U.S. Patent Office, concerning each patent or pending patent application.

If a patent notification lacks of any of this required information, the patent holder has thirty days from the date on which the target notifies the patent holder that the patent notification is incomplete to provide such information to the target.

Patent notifications may not contain false, misleading, or deceptive information.

The Wisconsin attorney general as well as the Department of Agriculture, Trade, and Consumer Protection have the authority to investigate and bring enforcement proceedings against individuals and entities that violate the bill’s provisions.  In such proceedings, the court has the authority to “make any necessary orders to restore any person any pecuniary loss the person has suffered because of the violation.”  The attorney general may also seek a fine of up to $50,000 for each violation.  “Each patent notification is a separate violation.”

The bill also provides a private right of action to a target “or other person aggreived because of a violation” to recover damages, costs of suit, attorneys fees, as well as an award of punitive damages up to $50,000 for each violation “or 3 times the aggregate amount awarded” as actual damages, costs and attorneys fees, “whichever is greater.”  The plaintiff may also seek temporary and permanent injunctive relief against violators.

The approval of the Wisconsin bill confirms the growing trend by state legislatures to take measures aimed at protecting companies doing business within their boundaries from bad faith assertions of patent infringement.  The United States Senate is currently considering similar legislation.