US Court Rules That “Patent Troll” is Not Defamation

When you call an organization or a person a patent troll, is it defamation? According to a US court, no.

Patent trolling is one of innovations greatest problems in the US. Essentially, patent trolling involves a company (typically a shell company) buying a patent or filing a patent. After that, they sit on the intellectual property waiting for someone to create something similar to that patent. After that, the company begins threatening litigation against companies that might have made money. That company demands a license fee in exchange for the ability for that company to survive.

An example of this happening would be a company filing a patent that would involve allowing someone to refer to something on a computer system or network. This, of course, is quite obviously a link which is common place and has plenty of prior art. After that, the company then starts threatening small websites with patent infringement because they used a hyperlink somewhere on the site. After extorting license fees, that company would then go to larger companies and demand much higher fees, showing them other sites that are paying the license fees.

Ultimately, activity like this not only doesn’t contribute to innovation in general, but also hinders it. It exploits the patent system in an effort to leech funds off of businesses who are actively trying to provide a product to the public.

The Electronic Frontier Foundation (EFF) has been advocating reforms on the patent system for some time now. One method of public advocacy is a feature on their site known as the “Stupid Patent of the Month“. Gems of this project include the patent on following privacy laws, texting and driving, and mathematical proofs. If you look at any of those patents and think, “how is that supposed to be a patent?”, well, that’s probably why they call it “stupid”.

Sometimes, the criticisms involve the term “patent troll”. Apparently, one company took exception to the phrase and attempted to sue critics for calling it a patent troll. That company, Automated Transactions, LLC (ATL), then got handed a blow by the New Hampshire Supreme Court when the court ruled that the term “patent troll” is not defamation. From the EFF:

EFF worked together with the ACLU of New Hampshire to file an amicus brief [PDF] in this case, explaining that the lower court judge got this case right when he ruled against ATL. That decision gave wide latitude for public debate about important policy issues—even when the debate veers into harsh language. We’re glad the New Hampshire Supreme Court agreed.

Last week’s ruling court notes that “patent troll” is a phrase used to describe “a class of patent owners who do not provide end products or services themselves, but who do demand royalties as a price for authorizing the work of others.” However, the justices note that “patent troll” has no clear settled definition. For instance, some observers of the patent world would exclude particular entities, like individual inventors or universities, from the moniker “patent troll.”

Because of this, when ATL’s many critics call it a “patent troll,” they are expressing their subjective opinions. Differences of opinion about many things—including patent lawsuits—cannot and should not be settled with a defamation lawsuit.

“We conclude that the challenged statement, that ATL is a well-known patent troll, is one of opinion rather than fact,” write the New Hampshire justices. “As the slideshow demonstrates, the statement is an assertion that, among other things, ATL is a patent troll because its patent-enforcement activity is ‘aggressive.’ This statement cannot be proven true or false because whether given behavior is ‘aggressive’ cannot be objectively verified.”

The court ruling also upheld tough talk about ATL’s behavior beyond the phrase “patent troll.” For instance, the court looked at statements referring to ATL’s actions as “extortive,” and rejected defamation claims on that basis, finding that was rhetorical hyperbole. Another ATL critic had complained that ATL’s efforts “cost them only postage and the paper their demand letters are written on.” This, too, was hyperbole, part of the give-and-take of a public debate.

The EFF calls this ruling good news for critics of the patent system.

Drew Wilson on Twitter: @icecube85 and Facebook.

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