Jon Bruning to push for task force to end patent 'scam' -
Published Wednesday, November 6, 2013 at 1:00 am / Updated at 11:24 am
Jon Bruning to push for task force to end patent 'scam'

LINCOLN — Attorney General Jon Bruning said Tuesday he plans to testify before the U.S. Senate this week and recommend a multistate law task force to combat companies that blanket states with letters threatening lawsuits over patent infringement.

“It is a pure scam,” said Bruning, scheduled to testify Thursday morning before the consumer protection subpanel of the Senate Commerce Committee. “They used to be going after big companies, but now it has changed to consumers, small businesses, and even nonprofit organizations.”

Bruning is referring to efforts by out-of-state patent ownership companies and their law firms.

He said hundreds of Nebraska companies and people who have bought seemingly innocuous devices such as document scanners have received letters demanding payment for infringing on a patent contained in the equipment.

Businesses receiving the letters, Bruning said, have been told to pay as much as $1,200 per employee or face a lawsuit for patent infringement.

Recent recipients of the letters, Bruning said, include an Omaha nonprofit vocal ensemble and county emergency management department.

Bruning said the Texas law firm Farney Daniels is responsible for sending many of the letters. The firm said in a statement that Bruning’s opposition to the patent enforcement actions amounts to “rhetoric” and that he has already lost one legal tussle with the firm over the issue.

Bruning said he will rely on the state’s deceptive trade practices law to stop the letters. He said the law gets broken when the letters threaten litigation absent sufficient due diligence to back up a claim of infringement. Bruning said it’s hard to believe that due diligence has been done, given the number of communiques sent to individuals, small businesses and low-profile nonprofit groups.

“I plan to call for a coalition of states. This is worthy of it, like with the tobacco cases,” Bruning said, referring to the partnership of state attorneys general that collected billions from cigarette makers in the 1990s as compensation for health-care costs related to treating smokers.

Bruning said ending what he calls harassment over patents directed at consumers and business users has the widespread support of corporate America.

“I have had calls of support from two dozen Fortune 500 companies,” Bruning said.

Bruning said his plan has nothing to do with a ruling this year by a U.S. district judge in Omaha over Farney Daniels; Bruning attempted to prevent the firm from pursuing patent cases in Nebraska after a Lincoln-based bank was sued over technology in the digital display screens in the institution’s lobbies.

The judge in the case said Bruning can’t bar Farney Daniels from representing clients in U.S. District Court.

Bruning said that he doesn’t care who represents whom, but that he does care who sends letters to Nebraskans threatening lawsuits and that he aims to stop it.

Farney Daniels said sending letters is standard practice and violates nothing. “The Nebraska Attorney General seems to consistently fail to understand, or blatantly disregard the standards of federal patent law,” said Brett Johnson, a Farney Daniels attorney.

“The practice of sending a letter to a business that may be infringing on a patent, prior to seeking a license agreement or bringing suit, is permitted by federal patent law. In some cases this can be a required step in the due diligence process by a patent owner.”

Johnson said the firm has asked a federal court to review the practice.

Contact the writer: Russell Hubbard    |   402-444-3133

Russell Hubbard covers banking, financial services, corporate finance, TD Ameritrade, business lawsuits, bankruptcies and other economic and financial topics.

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