Last week, Arizona Governor Doug Ducey signed into law HB 2386, known as the “Arizona Patent Troll Prevention Act.” Modeled after similar legislation passed by other states, the Act prohibits bad faith demands of patent infringement and gives the Attorney General authority to enforce the Act. Arizona now joins 27 states that, since 2013, have enacted similar legislation to deter and punish bad faith assertions of patent infringement.
The Act includes a non-exhaustive list of factors that may evidence a “bad faith” demand of patent infringement, including:
- the demand does not contain the patent number, the name and address of the patent owner, facts relating to the alleged infringement, and an explanation of why the person making the demand has standing;
- the person making the demand did not analyze or compare the patent claims against the target product before making the demand;
- the demand requests a response, payment, or licensing fee within an unreasonable time; and
- the demand contains false, misleading, or deceptive information, or the person making the demand knew or should have known that the assertion was without merit.
The Act also lists factors a court may consider as evidence of a “good faith” demand, such as:
- the person making the demand has engaged in a reasonable analysis of the patent claims compared to the target product, attempted to negotiate a resolution in a reasonable manner, and has demonstrated reasonable business practices in enforcing the patent or has previously successfully enforced the patent in litigation;
- the person making the demand has substantially invested in the use or production of the patented subject matter; and
- the person making the demand is the inventor or an institution of higher education.
Debates about whether such state laws are constitutional are expected to continue, in the absence of federal legislation, as states attempt to address bad faith allegations of patent infringement.