Monday, August 30, 2021

Federal Court Upholds Challenge to North Carolina's Abusive Patent Assertions Act

In May I mentioned some recent activity in Oregon and Washington involving state laws targeting bad faith patent assertion.  Recently Law360 published an article titled NC 'Patent Troll' Law Survives Constitutional Challenge, discussing a decision handed down on August 19 by U.S. District Judge Thomas Schroeder in Napco, Inc. v. Landmark Technology A LLC.  The decision denies Landmark's motion to dismiss a claim brought by Napco under North Carolina's Abusive Patent Assertions Act (APAA), N.C. Gen. Stat. § 75-140 et seq.  The decision concludes, among other things. that the complaint sufficiently pleads both objective and subjective bad faith (as required by Federal Circuit case law) to survive a preemption or Noerr-Pennington challenge; and that the act does not violate Landmark's rights under the First Amendment or the Equal Protection Clause (the latter argument arising because of the statute's carving out certain entities, including operating  entities, from liability).  On a first read, the decision seems thorough and well-reasoned, and the Law360 article helpful for those who may not have time to rummage through the 62-page opinion.  (One quibble, though:  the Law360 article describes the North Carolina law as one that "criminalizes patent licensing demand letters sent in bad faith," but I don't see anything in the APAA that specifically authorizes criminal actions--though I will leave it to those more knowledgeable than I whether N.C. Gen. Stat. § 75-13 would ever authorize a criminal prosecution for violation of the APAA.  The Napco case itself is a civil action, though, and I would be awfully surprised to see a criminal prosecution for violation of the act, even if it that is theoretically possible in some instances.)

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