Bad Faith Patent Demand Letters


Patent assertion entities (PAEs) are companies that hold a number of patents but do not manufacture any product under the patent. While some PAEs are legitimate companies that have acquired a patent as an investment in order to license the patent to a producing entity, it is asserted that other PAEs have no such legitimate intentions and instead act in bad faith by sending broad demand letters to companies that produce products that allegedly infringe the patents, hoping that the producing entity will agree to a quick settlement of the infringement claim rather than face the risk and cost of potentially lengthy and costly litigation. At least 18 states have enacted some legislation concerning this form of bad faith patent litigation, and a number of other states have considered such legislation. At least one federal court has ruled that this type of state legislation is preempted by federal patent law. A number of bills that addressed bad faith patent legislation were considered during the recently concluded 113th Congress; one of those bills passed the House, but its companion bill was not presented for a vote in the Senate. This committee will consider the need for and feasibility of enacting uniform or model state legislation concerning bad faith patent litigation.

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