The Michigan Bankers Association, on behalf of the entire banking industry of Michigan, applauds Rep. Mike Callton for introducing legislation to protect Michigan citizens and Michigan employers from unscrupulous attacks by patent trolls.

Patent “trolling” is well known across the nation and on the increase in Michigan. Entities, dubbed “patent trolls,” demand money from businesses with little or no foundation related to patents on obscure processes. The trolls tend to prey on small businesses that may find it less costly to pay questionable claims rather than defend threatened complex litigation.

Patent trolls typically produce nothing and have no business model other than acquiring obscure existing patents for the purpose of asserting very vague claims, often without any specific investigation or proof. Form letters demand payments and are followed by threatened “canned” suits that would require thousands of dollars for a small business to research or respond. Blasts of form letters at once in various communities and regions hope to find a percentage of unsuspecting businesses who cannot afford to defend. The trolls entering Michigan lost every similar action actually litigated across the country, and still they send vague demand letters.

Representative Callton’s bill, HB 5701, would require those asserting patent infringements to simply identify specifically the actions and processes they claim infringe their patents. Further, if a court finds claims asserted lacking good faith, the patent troll could be ordered to post bonds to proceed with litigation. Legitimate patent claims would be unaffected. Patent trolls would face reasonable thresholds to assert claims. The bill is modeled after similar statutes in other states.

Let’s be clear, the MBA respects and supports the rights of legitimate patent holders to protect their intellectual property. For example, industries that rely on new innovations, including Michigan’s pharmaceutical industry were consulted to ensure they maintain their patent protections on their work, which is important to Michigan’s economy and jobs.

HB 5701 will help put a stop to the practice of patent trolling and the Michigan Bankers Association urges all elected officials to support this bill. While respecting existing patents and legitimate patent holders, it enables the courts to hold accountable those who file unfounded claims.

No industry in our state should be held hostage by those whose only intent is to make money through scurrilous threats of lawsuits. Apart from the lack of ethics involved, patent trolling represents a significant and unnecessary drag on our job providers and our state economy.