Information technology is critical in Idaho. This week, the IT sector, and all businesses, are a step closer to being afforded much-needed relief and protection through the Legislature’s passage of SB1354 – The Bad Faith Assertions of Patent Infringement Act.
According to the Idaho Department of Commerce, nearly 50,000 Idahoans work in the IT sector. During the past decade, the number of high-tech companies in the state grew 61 percent and shows no sign of slowing. The Boise region is among the top 20 U.S. metropolitan regions for patent origination and in 2012, CNNMoney.com recognized Idaho as the sixth most inventive state in the country.
Simply put, an entrepreneurial and knowledge-based economy is key to the financial health of all business enterprises in the state. Any Idaho business, whether a multinational corporate entity, a pioneering start-up firm, or a long-established mom and pop operation, relies on a vibrant technology sector and steady stream of innovation to remain competitive.
In recent years, each of these types of Idaho businesses has been exposed to the pervasive threat of expensive, bad-faith patent litigation that could significantly cripple operations, if not put smaller companies out of business.
Virtually any business in Idaho using basic technologies to perform routine activities can find itself the target of highly aggressive patent assertion behavior from “patent trolls.” Patent trolls are entities that buy up several patents, then sue every company or individual who might be using or selling the invention that the patent troll claims to control.
The Bad Faith Assertions of Patent Infringement Act attempts to curtail this behavior and protect all businesses from such abuses.
Idaho recognizes the rights of patent holders in cultivating an entrepreneurial business environment. When a patent is legitimately infringed upon, enforcement of valid claims is essential to protect intellectual property. However, abusive and bad-faith patent litigation does not come under this classification. Many businesses in Idaho have been the recipient of a bad-faith infringement claim, often for the use of ubiquitous and standard technologies, such as: scanning documents to e-mail; using an on-line shopping cart function; offering free Wi-Fi to customers; or using software for an ATM transaction.
Sadly, for many businesses the threat of protracted and exceedingly expensive litigation (on average in the range of millions of dollars) offers no choice but to settle and pay licensing fees, even for claims lacking merit. Increasingly, small businesses feel the weight of these litigation threats, and cannot afford to wait any longer for reform.
Abusive lawsuits brought by patent trolls are costly. Some estimate that these lawsuits have cost the U.S. economy some 500 billion dollars in the last 20 years. In 2011, American software and hardware companies alone incurred $29 billion in direct costs from patent trolls, a 400 percent increase since 2005. Patent trolls are a serious threat to Idaho businesses and our state’s economy.
With the passage of this legislation, Idaho looks forward to continuing its reputation as an attractive home for all entrepreneurial and knowledge-based businesses. Through the protections provided in this Act to all businesses in the state, Idaho can allow patent holders to enforce valid claims of infringement. At the same time, we can protect Idaho businesses from the threat of abusive litigation and help to safeguard Idaho’s economic future.
Idaho Lt. Gov. Brad Little sponsored The Bad Faith Assertions of Patent Infringement legislation in the Senate. Amy A. Lombardo is a government relations and litigation attorney at Parsons Behle & Latimer, home to the largest intellectual property legal team in Idaho.