Section 8-12A-2

Assertion of patent infringement in bad faith.

(a) A person may not assert a claim of patent infringement in bad faith.

(b) The Attorney General may investigate claims of patent infringement alleged to have been made in bad faith and may do both of the following:

(1) Issue subpoenas to any person to appear and produce relevant papers, documents, and physical evidence, and administer an oath or affirmation to any person, in aid of any investigation or inquiry into possible violations of this chapter. Subpoenas shall be served in accordance with the appropriate Alabama Rules of Civil Procedure. Upon failure of a person without lawful excuse to obey a subpoena, the Attorney General may apply to a court of competent jurisdiction for an order compelling compliance. After an action is commenced, discovery may proceed in accordance with the Alabama Rules of Civil Procedure.

(2) Initiate a civil action in the name of the state, as necessary, to seek injunctive and any other relief available under this chapter or other law.

(c) Venue for actions under this section shall be proper in the circuit court of the county in which the defendant resides, is doing business, or has his or her principal place of business, or the county in which the unlawful act or practice was or is being committed.

(d) A target or a person aggrieved by a violation of subsection (a) may assert a cause of action in a court of competent jurisdiction for a determination of whether the patent infringement assertion was made in bad faith. The court may award the following remedies to a plaintiff who prevails in an action brought pursuant to this subsection:

(1) Equitable relief.

(2) Damages.

(3) Court costs and attorney's fees.

(4) Exemplary damages in an amount equal to fifty thousand dollars ($50,000) or three times the total of damages, costs, and fees, whichever is greater.

(e) A court may consider any of the following factors as evidence that a person has made an assertion of patent infringement in bad faith:

(1) The demand letter does not contain all of the following information:

a. The patent number.

b. The name and address of the patent owner or owners and assignee or assignees, if any.

c. Factual allegations concerning the specific areas in which the target's products, services, and technology infringe the patent or are covered by the claims in the patent.

(2) Prior to sending the demand letter, the person failed to conduct an analysis comparing the claims in the patent to the target's products, services, and technology, or an analysis was performed, but did not identify specific areas in which the products, services, and technology are covered by the claims in the patent.

(3) The demand letter lacks the information described in subdivision (1), the target requests the information, and the person fails to provide the information within a reasonable period of time.

(4) The demand letter demands payment of a license fee or response within an unreasonably short period of time.

(5) The person offers to license the patent for an amount that is not based on a reasonable estimate of the value of the license.

(6) The demand letter alleging patent infringement is meritless, and the person knew, or should have known, that the claim or assertion is meritless.

(7) The demand letter alleging patent infringement is deceptive.

(8) Any other factor the court finds relevant.

(f) A court may consider any of the following factors as evidence that a person has not made a bad faith assertion of patent infringement:

(1) The demand letter contains the information described in subdivision (e)(1).

(2) If the demand letter lacks the information described in subdivision (e)(1) and the target requests the information, the person provides the information within a reasonable period of time.

(3) The person engages in a good faith effort to establish that the target has infringed the patent and to negotiate an appropriate remedy.

(4) The person makes a substantial investment in the use of the patent or in the production or sale of a product or item covered by the patent.

(5) The person is either of the following:

a. The inventor or joint inventor of the patent, or in the case of a patent filed by and awarded to an assignee of the original inventor or joint inventor, is the original assignee.

b. An institution of higher education or a technology transfer organization owned or affiliated with an institution of higher education.

(6) The person has done either of the following:

a. Demonstrated good faith business practices in previous efforts to enforce the patent, or a substantially similar patent.

b. Successfully enforced the patent, or a substantially similar patent, through litigation.

(7) Any other factor the court finds relevant.

(Act 2014-218, p. 686, §2.)