Nebraska Attorney General Jon Bruning said Thursday that his office is investigating a Texas law firm known to represent patent trolls, or technology licensing companies that frequently sue businesses for seemingly innocuous reasons such as using a particular line of software code.
Bruning said his office is looking into Farney Daniels LLP to see if there are violations of the Nebraska Consumer Protection Act and Uniform Deceptive Trade Practices Act.
The law firm, Bruning said, has sent letters to Nebraska businesses on behalf of patent trolls threatening infringement lawsuits. In many cases, suits filed over such patent issues relate to technological processes embedded within computers or other devices that were developed long ago and are obscure to the end user.
“Businesses that have used, developed, or sold established technologies are often caught off-guard by such threats,” Bruning said in a statement. “Patent trolls make egregious threats with little or no valid legal purpose to gain fast money. It is a top priority of our office to protect Nebraska consumers and businesses from this sort of baseless harassment.”
Farney Daniels specializes in patents and intellectual property, said Bryan Farney, a partner in the firm. Clients, he said, range from Fortune 500 companies to individual inventors.
“We firmly believe that a strong patent system is vital to the U.S. economy, and are proud of our service to that system and to our clients,” Farney said in an emailed response to queries. “While the Nebraska attorney general may have concerns about the U.S. patent system and how it works, or about particular types of patent owners, we are confident that any fair investigation will conclude our firm has lawfully and honorably represented our clients in upholding their rights.”
Patent trolls have attracted great controversy nationwide, with Congress considering action to limit their activities. Such companies typically buy technology patents from inventors, wait for someone to infringe upon them, then sue.
So far this year, First National Bank of Omaha and Omaha-based Pinnacle Bank have been sued by patent trolls in U.S. District Court in Omaha on allegations of infringement. Both banks declined to comment, citing a policy on pending litigation.
First National of Omaha, the largest bank based in the state, was sued in May by Intellectual Ventures, a patent firm in Washington state started by a former Microsoft Corp. executive. The suit says First National's firewalls, cryptography and distribution of digital property infringe upon the company's patents. First National declined to comment on the suit.
Pinnacle Bank was sued this month. Florida-based Activision TV says in the suit Pinnacle's digital sign systems infringe upon patents it owns. Attempts to reach an attorney for Pinnacle Bank were unsuccessful.
There are six bill proposals making the congressional rounds in Washington, D.C. that would bear on such suits, said Christal Sheppard, a patent-law professor at the University of Nebraska Law School.
Sheppard visited the nation's capital this week to get an up-close look at the proposals. She said the intent of the proposed bills ranges from the loser of such suits being required to pay the opposition's legal fees to requiring the end users of technologies facing patent suits to be automatically replaced by the manufacturers or vendors.
“Not only has American business taken notice,” she said. “Congress has taken notice.”