The ABA Journal reported this week that patent trolls are turning to First Amendment protection for shelter against false cease and desist letters. In a first example, a patent troll sent 9,000 demand letters to small businesses alleging infringement by scanning documents and emailing them. According to the Federal Trademark Commission (FTC), the letter contained a number of misrepresentations including:
- “…we have had a positive response from the business community to our licensing program.”
- “…many companies” had purchased licenses as a result.
When these letters were sent only two (2) targets of the program had bought licenses. The vast majority of recipients did not respond so the patent troll’s attorneys sent out two additional rounds of follow up letters threatening to sue in two (2) weeks. The new letters were accompanied by a draft complaint against the recipient. However, six (6) months after the last of the letters were sent no infringement suits were filed. The FTC alleged the threats of imminent litigation were false and the patent troll had no intent to sue.
In a second example, the article notes that Innovatio IP Ventures sent more than 8,000 demand letters to “bakeries, restaurants, cafes, hotels and other small businesses.” These letters alleged infringement for providing free Wi-Fi Internet access to patrons of an establishment. A lawsuit against Innovatio asserted inflated numbers and values for the patent licenses that Innovatio had sold.
However, two U.S. Supreme Court cases provide certain First Amendment protection for the right to petition the government (Eastern Railroad Presidents Conference v. Noerr Motor Freight (1961) and United Mine Workers v. Pennington (1965) ) which lower courts have extended to prelitigation documents such a patent infringement demand letters. A federal court held Innovatio was protected last year, ruling that the alleged misrepresentations were covered by Noerr-Pennington.
Recommendations: If you receive a cease and desist letter alleging patent infringement seek patent counsel and do not respond. By analogy you would not reply to spam emails. Noerr-Pennington may protect the patent trolls’ demand letters but prior to initiating a patent litigation substantial effort must be made or else the plaintiff risks Rule 11 sanctions for a frivolous action. For egregious letters a referral to the state bar of the attorney sending the demand may be warranted.