GO WEST YOUNG PATENT HOLDERS: The Oregon anti-patent statute

This author’s study of the Blackberry settlement fallout[1] has unearthed decisions from Oregon federal district courts which offer some respite from another federal court [2] endorsing a state anti-patent statute.[3]   One such decision occurred in 2017.  In Boydstun Equipment Manufacturing LLC v. Cottrell, Inc.[4] alleged infringer Boydstun filed a complaint for declaratory judgment asserting in part that (i) Cottrell’s patent enforcement demonstrated bad faith under the Oregon state anti-patent statute.  However, the court held that the anti-patent statute was pre-empted (superseded) in this instance by federal patent law, because Cottrell’s did not adequately allege that Boydstun’s infringement assertions were objectively baseless (that is, a reasonable litigant would conclude there was no manner by which Boydstun’s legal position was valid). The court then dismissed Boydstun’s claim of bad faith infringement assertion based upon this anti-patent statute.[5]

More recently, in Landmark Technology, LLC v. Azure Farms, Inc.,[6] Landmark filed a patent infringement complaint against Azure Farms.  Azure Farms counterclaimed for bad faith patent litigation under the Oregon state anti-patent statute, and Landmark Technologies moved to dismiss the counterclaim. The court held that a state law is implicitly pre-empted if the state law conflicts with a federal law such as the patent statute.[7] In this instance, to avoid pre-emption Azure Farms must allege and prove that the letter and/or lawsuit was (i) in objective bad faith by (ii) clear and convincing evidence.[8] The court then replaced the preponderance of the evidence provision from the anti-patent statute to preserve its remaining text. [9]  The court also held that the anti-patent statute did not interfere with the federal patent statute, because state statutory factors for evaluating liability were not mandatory. However, the court did conclude that Azure Farm’s counterclaim was pre-empted as presented, in part because it did not adequately explain why Landmark Technology’s infringement position was objectively baseless.  The court then granted Landmark Technology’s motion to dismiss this anti-patent statute claim without prejudice.[10]

© 2021 Adrienne B. Naumann, Esq. All rights reserved. Ms. Naumann does not sponsor or endorse the advertisements at adriennebnaumann.wordpress.com.

[1] For previous discussion on this topic please refer to the articles at adrienebnaumann.wordpress.com.

[2] NAPCO, Inc. v. Landmark Technology, A, LLC, 2021 Dist. LEXIS 156605 (M.D. N.C.  August 19, 2021).

[3] Anti-patent statutes are state laws which impose civil liability for distribution of bad faith patent infringement assertion letters (i.e., cease and desist letters). State legislatures enacted these statutes soon after the Blackberry $600 million patent infringement settlement. See NTP, LLC v. Research in Motion, 397 F. Supp.2d 785, 788 (E.  D.  Va. 2005). Notably, this settlement occurred after (i) a jury verdict on the merits for patent holder NTP, LLC and(ii) an appeal to the United States Court of Appeals for the Federal Circuit. Furthermore, the settlement amount was based upon the widespread global distribution of infringing products. Immediately thereafter, sentiment exponentially grew against all patent holding companies (with some exceptions) which sent patent assertion infringement letters to alleged infringers. State anti-patent statutes are one manifestation of this sentiment, because they impose additional legal hurdles to enforcing rights of all patent holders.

Consequently, among other concerns state anti-patent statutes are all clearly much too broad in scope.   For example, most federal cases with pending anti-patent statute claims exclusively address one patentee sending a single cease and desist letter to a single business competitor.

[4] 2017 Dist. LEXIS 179659 (D. Oregon October 24, 2017).  Cottrell sent cease and decease letters, but it had not yet filed a lawsuit.

[5] Id. at 16.

[6] 2020 U.S. Dist. LEXIS 137529(D. Oregon March 24, 2020).

[7] Id. at 3.

[8] Id.

[9] Id. at 4.

[10] Id. at 5. “Without prejudice” means that Azure Farms could resubmit this particular claim to the court if it provide specific reasons why Landmark’s infringement allegations were objectively baseless.


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