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Patent Troll Bill Passes, Heads to the Governor

A bill to protect small businesses, including credit unions, from patent troll abuse is headed to the governor. The Missouri House voted in favor of SB 706 by a vote of 143-4 late on May 5. The bill was previously voted out of the Senate 32-0 on April 10. Senator Mike Cunningham (R-District 33) is the bill's sponsor.

Patent trolling is the practice of sending threatening letters to businesses demanding payment for frivolous patent infringement assertions. SB 706 sets clear criteria to help distinguish legitimate from illegitimate patent infringement assertions and provides restitution for businesses affected by patent trolling. Credit unions nationwide – including Missouri – have seen a rise in patent troll abuse in the past few years.  

"The goal of this bill is to deter patent trolls from sending frivolous demand letters," says David Kent, director of state legislative affairs for Missouri Credit Union Association. "We know several credit unions in Missouri were affected by patent trolling. They had little to no protection against the allegation, forcing them to decide either to spend thousands of dollars in court or on a settlement - which, unfortunately, is what many small businesses end up doing. SB 706 flips the scenario, creating parameters that a patent infringement assertion must contain to be considered valid."

Governor Jay Nixon (D) has the option to sign, veto or allow SB 706 to become law on August 28. Missouri becomes just the ninth state to have its legislature pass patent troll legislation. Patent trolling is also an issue on the federal level. Missouri U.S. Senator Claire McCaskill (D) introduced a patent trolling prevention bill, the Transparency in Assertion of Patents Act (S.2049), and MCUA has provided information on credit union impact to assist with the legislation.