The short answer is – we’re about to find out.
An inventor’s patent rights are based on the U.S. Constitution:
“Congress shall have power… to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”
Congress has exercised this power by statute and, through the U.S. Patent and Trademark Office, by regulation. The Supremacy Clause of the U.S. Constitution says:
“…This Constitution, and the laws of the United States… shall be the supreme law of the land…”
That means Federal law, including federal patent law, is supreme over state and local laws. Federal law includes specific ways that U.S. patents are granted, challenged, and enforced.
So I’ll repeat my question – can a state prevent enforcement of a U.S. patent?
A little background:
Around the turn of the century, the oft-sued and anti-patent high tech industry started a full-court public relations press against patents and patent owners. It created a term, “patent troll,” to dehumanize patent owners and make them easier to hate. And it had a poster child for patent trolls; namely MPHJ Technologies LLC, wholly owned by Texas attorney Jay Mac Rust. In 2012, Mr. Rustpurchased patents relating to scan-to-email technology for $1.00 and promptly sent out at least 16,465 demand letters to small businesses across the country saying that the small businesses would be sued for patent infringement if they did not cough up $1,000 per employee.
Federal and state regulators and legislators noticed, probably due to the screams of their constituents. Multibillion dollar, multinational corporations pushed the patent troll narrative to move legislation through Congress to make it harder to obtain patents and easier to defeat issued patents.
Did the multibillion dollar, multinational corporations care about threats to small businesses? Hmm. Nonetheless, the public relations effort convinced several states to enact laws to limit patent enforcement. None of the states went farther than Idaho, which limits filing a Federal patent infringement complaint in Federal court.
A 2014 Idaho statute entitled ‘Bad Faith Assertion of Patent Infringement’ addresses assertions of patent infringement in demand letters and also in court complaints. The Idaho statute requires that a patent owner post a money bond equal to treble the defendant’s likely damages if there is a ‘reasonable likelihood’ of bad faith in the assertion of patent infringement. There is no upper limit on the amount of the bond. Since all patent infringement actions are in Federal court, the Idaho statute directly limits access to Federal court by patent owners.
The Idaho statute is either preempted by federal law (and hence unenforceable) or it is not preempted and is enforceable. A Federal judge recently decided that the Idaho statute is NOT preempted – a decision that in on appealto the U.S. Court of Appeals for the Federal Circuit. We expect a decision within the next several months. This author expects that the Federal Circuit will decide that the Idaho statute is preempted due to its inconsistency with Supreme Court precedents. We’ll know soon. If the Idaho statute survives, we can expect erosion of access to Federal courts in many areas, particularly in cases under the U.S. Constitution, Federal statutes and treaties.
— Robert Yarbrough, Esq.