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Patent trolling, asbestos protection legislation heading to governor

Posted July 31, 2014

— A bill that would help North Carolina companies fend off frivolous patent claims is heading to the governor. 

Dubbed the N.C. Commerce Protection Act of 2014, the measure passed the House 81-30 and the Senate 45-0.

The patent protection provisions are relatively uncontroversial.

Local tech companies like Cary's SAS Institute pushed for the measure, saying they were often forced to defend themselves against "non-practicing entities," or NPEs, that are shell companies created for the purpose of holding a patent. Those companies then try to enforce the patent against bigger companies, hoping to extract settlements in lieu of costly litigation. 

SAS officials told lawmakers earlier this year that, when companies do fend off such suits, they often are left holding the bag for millions of dollars worth of legal fees and no way to strike back.

Although patent suits are heard in federal court, state laws control certain rules related to the cases. This pending bill would allow local companies to hold the owners of NPEs, often called patent trolls, accountable by going after their personal assets, rather than just the assets of the companies involved. 

The idea, sponsors say, is to make it less lucrative and more risky to bring a failed patent infringement claim. 

Asbestos provision controversial

Another part of the measure was much more controversial. The same bill would cut off liability for companies that have bought other corporations that at one time manufactured asbestos. The insulating fiber has been known to cause cancer for decades and is the source of frequent litigation.

The bill would, six months from now, limit the ability of plaintiff to target a certain category of corporations. Thus far, Crown Cork & Seal is the lone member of that category. 

"We are going to be cutting off plaintiffs that are ill and dying," said Rep. Rick Glazier, D-Cumberland.

However other members, including Rep. Paul "Skip" Stam, R-Wake, noted that it has been decades since the company has had any asbestos products. At some point, he said, the company's liability should be at an end.

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  • Matt Wood Aug 1, 2014
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    "This pending bill would allow local companies to hold the owners of NPEs, often called patent trolls, accountable by going after their personal assets, rather than just the assets of the companies involved."

    I wish we could apply the same rules to Wall Street and the big banks, then we'd see just how fast "too big to fail" corporations would cease risky, and sometimes illegal, behavior. Bailouts would become a thing of the past!

    View quoted thread


    I've studied patent law, and most NPEs do nothing of the sort. Many times they actually end up bankrupting the small businesses that legitimately created the invention, as the predatory NPEs will file all kinds of patent applications they can dream of in the hopes someone else will actually make it work in order to prey off them. If only they would also apply this to DNS pirates!

  • fairfaxtransplant Jul 31, 2014

    The U.S. Constitution affords a Patent Owner the right to prevent others from making, using, selling, or offering to sell a patented invention. "NPEs" are instrumental in protecting the rights of independent inventors from victimization by deep-pocketed companies that want to profit from the ideas of others.

  • miseem Jul 31, 2014

    However other members, including Rep. Paul "Skip" Stam, R-Wake, noted that it has been decades since the company has had any asbestos products. At some point, he said, the company's liability should be at an end.

    So, if you get cancer after working in one of these facilities years ago, you are pretty much out of luck. Change that. Totally out of luck. Despite the fact that the companies knew back then that asbestos caused cancer. And paid a lower price when they bought out the company years ago because there was a liability issue due to asbestos. Looks like a win - win. For the GOP, the companies, their CEOs and their lobbyists. Not so much for the people in NC.