Earlier this year, I wrote about efforts to reform the patent system to curtail abuses by “patent trolls.”  Patent trolls do not manufacture anything.  Rather, they often buy up patents and then bring lawsuits against businesses seeking to extract licensing fees.  Last week, the Federal Trade Commission (FTC) reported on its blog that it had settled a complaint against a patent asserion entity (a.k.a. patent troll) that the FTC claimed had falsely threatened patent suits against small businesses or made “unfounded claims that other companies have paid for patent licenses.”

Specifically, the FTC’s blog reported:

[T]he respondents sent out a series of letters to thousands of small businesses. The first letter – sent to more than 16,000 businesses on the letterhead of one of MPHJ’s dozens of six-letter subsidiaries – told the recipient they “likely have an infringing system” and directed them to contact the sender within two weeks “so that we may agree with you upon an appropriate license arrangement if one is needed.” The letter offered to settle without court action if the business agreed to a license of $1,200 per employee. (Other versions said $1,000.)

The FTC alleged that the patent troll made a series of misrepresentations, including that lawsuits would be filed even though the FTC reported that the patent troll did not file a single lawsuit.

WHAT IS THE KEY TAKE AWAY FOR MANUFACTURERS?

The rash of patent troll lawsuits against manufacturers has been on the rise.  Typically, these lawsuits are preceded by a letter seeking a fee in exchange for a license.  Even though a lawsuit may never be filed, it is important under most circumstances to advise legal counsel immediately because when a company is notified can be important to the litigation.  Additionally, if you see lawsuits being filed by others in your industry, track those developments closely because plaintiff’s lawyers often find an industry and move from one company to the next.  The good news, however, is that the FTC is taking notice, which hopefully will help stem the tide.

Print:
EmailTweetLikeLinkedIn
Photo of Jeffrey White Jeffrey White

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or…

I am a partner at Robinson+Cole who handles corporate compliance and litigation matters for both domestic and international manufacturers and distributors that make and ship products around the world. My clients have ranged from publicly traded Fortune 500 companies to privately held and/or family owned manufacturers. For those looking for my detailed law firm bio, click here.

I am often asked why I have focused a large part of my law practice on counseling manufacturers and distributors. As with most things in life, the answer to that question is tied back to experiences I had well before I became a lawyer. My grandfather spent over 30 years working at a steel mill (Detroit Steel Company), including several years in its maintenance department. One of my grandfather’s prime job duties was to make sure that the equipment being used was safe. In his later years, he would apply those lessons learned in every project we did together as he passed on to me his great respect and pride for the manufacturing industry.

Because of these experiences, I not only feel comfortable advising executives in a boardroom, but also can easily transition to the factory floor. My experience has involved a range of industries, including aerospace and defense, chemicals, energy, pharmaceuticals and life sciences, nutritional and dietary supplements, and retail and consumer products. While I have extensive experience in litigation (including product liability and class actions), I am extremely proactive about trying to keep my clients out of the courtroom if at all possible. Specifically, I have counseled manufacturers and distributors on issues such as product labeling and warranties, product recalls, workplace safety/OSHA, anti-trust, and vendor relations, among other things. I always look for the business-friendly solution to a problem that may face a manufacturer or distributor and I hope this blog will help advance those efforts.