Colorado Passes Legislation to Curb Bad Faith Patent Infringement Claims | Practical Law

Colorado Passes Legislation to Curb Bad Faith Patent Infringement Claims | Practical Law

Colorado has enacted legislation prohibiting the communication of bad faith claims of patent infringement to end users of products and services.

Colorado Passes Legislation to Curb Bad Faith Patent Infringement Claims

Practical Law Legal Update 3-616-6865 (Approx. 3 pages)

Colorado Passes Legislation to Curb Bad Faith Patent Infringement Claims

by Practical Law Intellectual Property & Technology
Published on 23 Jun 2015 • Colorado
Colorado has enacted legislation prohibiting the communication of bad faith claims of patent infringement to end users of products and services.
On June 5, 2015, Colorado enacted House Bill 15-1063, which prohibits any person from communicating a bad faith claim of patent infringement to "intended recipients."
Under the new law, an intended recipient includes any person that both:
  • Obtains a product or service in the commercial market that is not for resale in the ordinary business.
  • Is, or later becomes, the subject of a patent infringement allegation.
The law prohibits persons and their affiliates from communicating patent infringement claims to intended recipients in bad faith. The law identifies factors that courts may consider to determine whether a communication is in bad faith, including whether:
  • The communication falsely states that the sender has filed a lawsuit in connection with the claim.
  • The communication's assertions lack a reasonable basis in fact or law. The law identifies factors that a court may consider as evidence that a communication lacks a reasonable basis, including whether:
    • the person asserting the patent is not the person, or does not represent the person, who has the current right to license or enforce the patent;
    • the patent has been held invalid or unenforceable in a final judgment or administrative decision; or
    • the communication seeks compensation for activities that occurred after the patent expired.
  • The content of the communication fails to include information necessary to inform an intended recipient about the patent assertion by failing to include either:
    • the identity of the person asserting the claim;
    • the patent that is alleged to have been infringed; or
    • the factual allegations concerning the specific areas in which the product, service or technology allegedly infringes the patent.
The new law identifies several activities that do not violate the law, such as:
  • Notifying another of a party's ownership or licensing right in a patent.
  • Notifying another that the infringement claim arises under 35 U.S.C. § 271(e)(2) or 42 U.S.C. § 262.
  • Seeking compensation for infringement or a license based on a good faith investigation and reasonable belief that the compensation is warranted.
The new law does not apply to any communication sent by:
  • A patent owner using the patent for substantial research, development, production, processing, manufacturing, or delivery of products or materials.
  • An institute of higher education.
  • A technology transfer organization whose primary purpose is to facilitate the commercialization of technology developed by an institute of higher education.
  • A person asserting a claim for relief under 35 U.S.C. § 271(e)(2) after an objective good faith investigation.
The new law does not create a private cause of action. However, it authorizes the Colorado attorney general to:
  • Subpoena witnesses and seek relevant discovery.
  • Seek injunctive relief, including temporary restraining orders.
  • Obtain a civil penalty of not more than $5,000 per violation.
The new law goes into effect on August 5, 2015.