N.C. Governor signs patent troll bill Into law



Among the more than a dozen bills North Carolina Gov. Pat McCrory signed into law last week, one takes aim at so-called “patent trolls.”

The “Abusive Patent Assertions Act,” an article within Senate Bill 648, attempts to “strike a balance” between the interests of the state’s businesses and economy and those legitimate patent enforcement actions.

The bill was sent to McCrory Aug. 1 and signed five days later.

“As a businessman, I fully support any piece of legislation that encourages investment, growth and job creation,” state Sen. Brent Jackson said earlier this month.

The new law is a “big step” in improving the state’s civil justice system, said Jackson, the bill’s primary sponsor.

A stand-alone version of the legislation passed the state House of Representatives, but SB 648 — which includes other provisions aimed at protecting pharmaceutical companies and certain companies against asbestos lawsuits — remained in negotiations between the House and Senate for weeks.

The bill’s authors — Jackson and Sens. Jim Davis, Wesley Meredith and Jerry Tillman, all Republicans — argued that the legislation is necessary as the state is home to a growing “high-technology, knowledge-based” economy, and to continue growing, it must attract new, small and mid-sized technology companies.

“Doing so will help provide jobs for North Carolina’s residents and boost North Carolina’s economy,” the now-law states.

The state also is home to retail and manufacturing companies — which are more likely to succeed if not inhibited by abusive and bad-faith demands and litigation, the lawmakers argued.

“Patent litigation can be technical, complex and expensive,” the law states. “The expense of patent litigation, which may cost millions of dollars, can be a significant burden on companies.

“North Carolina wishes to help its businesses avoid these costs by encouraging the most efficient resolution of patent infringement claims without conflicting with federal law.”

Like other state patent troll legislation, SB 648 gives jurisdiction to a state court over a person or entity that sends a “demand letter” to a state-based company.

Demand letters — the crux of the ongoing patent reform debate — are often sent by patent trolls in an attempt to enforce or assert rights in connection with a patent or a pending patent.

Generally speaking, patent trolls are those patent assertion entities or non-practicing entities that purchase groups of patents without an intent to market or develop a product and then target other businesses with lawsuits.

If a letter is found to be in bad faith, the North Carolina law provides for equitable relief, monetary damages, costs and reasonable attorneys’ fees, as well as “exemplary damages” of either $50,000 or triple the total damages, costs and fees, whichever is greater.

The North Carolina Chamber sent a letter of support for the legislation to McCrory earlier this month.

“The North Carolina Commerce Protection Act (SB 648) adds important protections for North Carolina businesses, which will provide fairness and predictability and encourage job creation,” NC Chamber Chairman Jim Whitehurst wrote.

The Chamber thanked the governor and lawmakers for their “commitment to strengthening” the state’s economy.

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