Patent Trolls: A Taking Action Investigation

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HUNTSVILLE, Ala. (WHNT) - Innovation is the heart of Huntsville. We create things every day that prosper our economy. But with creativity comes deceit. Patent Trolls have made their mark in the Tennessee Valley, targeting business owners and companies.

Recently, Bill Loden, a local home inspector, contacted WHNT News 19 to share his story. A company called Home Services Inc. sent him a letter claiming he was infringing on their patents.

This all stems from an infrared camera that Loden uses during home inspections. A $17,000 dollar thermal imaging device used to check for air tightness and energy efficiency, to be exact. It’s an added service he uses to help his customers save money.

Loden has been using the camera since 2006 with no problems. That is, until Home Safe contacted him in 2011. The letter claimed Loden was using the using their patented method of infrared inspections.

“They were threatening me,” said Loden, “And they went on to say that if you try to defeat our patents it’s going to cost you hundreds of thousands of dollars.”

Home Safe’s patents aren’t about the product themselves; it’s about the process and technique. The company doesn’t sell infrared cameras. They simply claim to own six federally approved patents in the U.S. that cover the use of infrared technologies in building inspections.

Here’s what the demanded from Loden:

· Pay $1,000 in back pay for using their infrared process.
· Or, sign an affidavit that he will never use infrared in a home inspection again.
· Or pay $10,000 in damages for each use and prepare to be sued.

WHNT News 19 turned to a patent expert to help better understand the situation, which has become controversial nationwide.

David Lucas, with Bradley Arant Boult Cummings, has worked with companies like Intergraph on patent protection and litigation. Lucas has also defended several large local employers against troll cases and confirms there is troll activity in Huntsville.

So what is a patent troll? Lucas sums it up best.

“Typically it is a company that does not have a commercial product and not in the market to sell things,” said Lucas, “But either have bought the patent or acquired it through other means and then threatens litigation, or threatens licensing opportunities to collect royalties.”

You will be amazed at the amount of money it takes to defend one of these cases in court. “An average patent case can run anywhere between a million and a half, to 2 million dollars, per patent to defend,” said Lucas.

Big companies pay the big bucks to take the trolls to court. But small business owners like Loden can’t afford to go that route, and often end up paying the fees just to stay in business.

Lucas said some of the greatest abuses in troll litigation are around method claims, similar to Loden’s situations. Those abuses are now being scrutinized by the government and have made new headlines for the last several months.

According to the White House, in the last two years, the number of lawsuits brought by patent trolls has nearly tripled, and account for 62% of all patent lawsuits in America. The report suggests that victims of patent trolls paid $29 billion in 2011, a 400% increase from 2005.

Currently there’s a bill in Congress to stomp out this practice. The bill would shift fees, holding trolls responsible if they bring bad faith litigation to the table.

Alabama Attorney General Luther Strange recently announced that Alabama has joined 42 other Attorneys General in submitting a letter to the Secretary of the Federal Trade Commission (FTC) voicing strong support for the federal agency’s proposed nationwide investigation of patent trolls.

And this past Thursday, The Alabama Senate passed a bill Thursday with broad support from both Republicans and Democrats to prevent so-called “patent trolls” from exploiting businesses.

Senator Arthur Orr’s proposal authorizes the Attorney General to investigate claims of bad faith patent infringement claims and gives the recipient of a bad faith accusation the right to counter-sue in state court. The next move is for the bill to go to the Alabama House of Representatives in Montgomery.

In the meantime, Loden says he’s not succumbing to demands. He’s formed a coalition with other home inspectors and businesses so they can fight any lawsuit that comes his way.

And if he should win, hopefully he will have state and federal laws to back him up. Otherwise inevitably it’s the consumer that suffers.

“If I can`t do this service,” said Loden, “I can`t help consumer save money on their energy bills.”

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