Attorney General targeting ‘patent trolls’

Photo of a Semiconductor chip, an example of a product that is commonly manufactured and sold without the consent of the patent's holder.

RICHMOND – Matthew Osenga, an attorney who specializes in intellectual property and patent prosecution, said that in all his years of practicing law, he has had only one case in which somebody came to him fearing a lawsuit about a fraudulent patent claim. What happened?

“We chose to not do anything, and nothing came of it,” Osenga said Monday from his office at the Richmond law firm of Goodman, Allen and Donnelly.

But some experts say fraudulent claims filed by so-called “patent trolls” are a major problem. That’s why Virginia Attorney General Mark Herring recently created a “Patent Troll Unit” to go after people who try to extort money by fraudulently claiming that someone has stolen their patent.

According to a study cited by Herring’s office, patent trolls cost the U.S. economy about $29 billion a year, with individuals and companies bearing the brunt of the loss. At this point, it is unclear how much patent trolls cost the Virginia economy.

“One of the things that could be really valuable about the Patent Troll Unit is that by having a more centralized unit working on the issue, we can get a better feel for which businesses are at risk, and how much of a problem this is in the commonwealth,” said Michael Kelly, the director of communications for Herring’s office.

“Right now, there’s no one really looking at this issue in a coordinated way to establish the scale or impact of patent trolls at the state level.”

Kristen Osenga, a University of Richmond law professor who specializes in patent law, said there are a few problems with establishing a “Patent Troll Unit.”

“By calling it a ‘Patent Troll Unit,’ basically [Herring is] saying, ‘Hey, let’s go after these people who are bad because they don’t make anything,’ ” said Professor Osenga, the wife of attorney Matthew Osenga.

Osenga said she understands there are people who send letters falsely alleging that a company or individual has committed patent infringement. But at the same time, she said, there are other people who have a solid legal basis for suing for copyright infringement. She cited the company Conversant.

“Back in the ’70s and ’80s, they developed, manufactured and sold semiconductor chips. They were a real company, manufacturing and selling real things,” Professor Osenga said. “In the ’90s, it turned out that the semiconductor industry was full of rampant infringement … So they were losing significant amounts of market share to all of these infringers, until they faced the choice: Do we sue all these people, or go out of business?”

According to Osenga, the company eventually began licensing its patents to the infringing companies, which were better at manufacturing products. Conversant then became a research and development firm that licensed its patents instead of selling them. As a result, the company became known for its patent lawsuits and developed a bad rap among some people in the patent community.

Osenga said she fears that Herring’s office might unfairly prosecute similar companies that look like patent trolls but don’t do anything unethical. Herring’s office found her concerns unwarranted.

“Of course the Unit will not pursue action against companies that make legitimate claims of patent infringement,” Kelly said in an email response. “In fact, these efforts will strengthen the overall patent system by weeding out some of the bad actors that are abusing it.”

Regardless, as a result of legislation passed last year, Herring’s office now has the power to investigate and prosecute patent trolls and impose financial penalties for misdeeds.

In an open invitation to the Virginia Chamber of Commerce, the state’s largest business advocacy group, Herring asked business people who think they may have been victims of patent trolling to report it by:

“Because my office is authorized to seek injunctions against that kind of behavior,” Herring said, “we can identify and bring action against a few of these bad actors and really send a strong message that these kind of abusive tactics will not be tolerated in Virginia.”

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