“The New Hampshire Supreme Court affirmed the dismissal of Automated Transactions’ defamation claims as unactionable because the court found that the defendants’ references to Automated Transactions as a ‘patent troll’ were statements of opinion, not fact.”
On August 16, the Supreme Court of New Hampshire issued an opinion in Automated Transactions, LLC v. American Bankers Association affirming a lower court’s decision to grant a motion to dismiss claims of defamation alleged by an inventor whose legitimate patent licensing business was decimated by a collection of entities and individuals deriding that inventor as a “patent troll.” The decision is certainly unwelcome news to any inventor concerned by the prospect that large entities could infringe upon their intellectual property and escape any chance of facing justice simply by hurling the “patent troll” epithet.
The opinion issued by the New Hampshire Supreme Court rehashes elements of Dave Barcelou’s inventor story that we’ve previously covered on this website, including Barcelou’s development of an automated transaction machine and his attempts to monetize his patents after a series of companies, including financial institutions, began using web-enabled ATMs that practiced Barcelou’s invention. After building a multi-million licensing operation, a series of entities including the Credit Union National Association (CUNA) and the American Bankers Association (ABA) made claims that Automated Transactions, the entity created by Barcelou to hold the ATM’s intellectual property, was a “well-known patent troll” engaging in activities meant to “shakedown” banking institutions through licensing demands that cost “nothing more than the price of a postage stamp and the paper the claim is written on.”
Automated Transactions brought its defamation suit against CUNA and ABA to New Hampshire Superior Court, which granted a motion to dismiss the case last March after the judge in the case found that the term “patent troll” wasn’t necessarily pejorative. The present appeal followed Judge Brian Tucker’s decision to dismiss.
Patent Troll References Are Statements of Opinion
The New Hampshire Supreme Court affirmed the dismissal of Automated Transactions’ defamation claims as unactionable because the court found that the defendants’ references to Automated Transactions as a “patent troll” were statements of opinion, not fact. The appellate court acknowledged that “patent troll” is a derogatory phrase which has increased in use in recent years but of which “a widely accepted definition… has yet to be devised.” The term’s “meaning is sufficiently elusive to permit application to any of an amorphous number of entities.” In reaching this conclusion, the court cited to various cases, including one from the Northern District of California against the Electronic Frontier Foundation, where the court determined that EFF’s claim that a patent owner “seems to be a classic patent troll” was cautiously phrased as a statement of opinion, leading the court to dismiss claims of defamatory liability.
In discussing CUNA’s use of the “patent troll” term, the appellate court determined that CUNA’s statement that Automated Transactions is a patent troll because its patent-enforcement activity is “aggressive” can’t be proven true or false because “whether given behavior is ‘aggressive’ cannot be objectively verified.’” Although CUNA defined what a patent troll was, the definition itself didn’t have a precise meaning that was capable of verification.
It should be noted that CUNA’s entire definition for patent troll included “an entity that owns patents and enforces them in an aggressive way with no intention to market the patented invention.” Interestingly, the appellate court’s discussion of the case background acknowledges that Barcelou’s business activities included “hir[ing]… an industrial design firm to help refine” his invention, “creating additional prototypes,” seeking “capital investments” and undertaking “efforts to commercialize his invention.” Many will likely recognize that these are the very steps an inventor would undertake precisely because he or she has an intention to market a patented invention.
Court’s Decision Deals “Irreparable Harm” to Self-Made Inventors
The New Hampshire Supreme Court also found the ABA’s uses of “patent troll” in two instances of congressional testimony to be nonactionable as expressions of opinion based on disclosed facts. References to Automated Transactions licensing efforts as “an effort to extort payments” were merely rhetorical hyperbole, as were statements regarding demands that the licensing demands cost nothing more than postage and paper. “No reasonable listener, attendant to the statement’s context, would have understood ABA to be asserting that [Automated Transactions’] efforts are, in fact, virtually costless,” the appellate court wrote.
William Lerner, General Counsel for Automated Transactions, lamented the damaging nature of the New Hampshire Supreme Court’s decision to the prospects for inventors, and the ways it may embolden patent infringers in the future. “I believe the rationale of the New Hampshire Supreme Court does an injustice to the individual inventor—the ‘self-made inventor’ and the ‘university researcher’ as those terms are used by Justice Clarence Thomas in the eBay v. MercExchange decision,” Lerner said. He added:
“I believe that this decision further damages the image of the self-made or individual inventor by denying them, as the plaintiffs, the opportunity to have their day in court with a trial. Accordingly, the New Hampshire courts have caused an individual or self-made inventor to suffer irreparable harm. By not focusing on the branding of the plaintiffs as ‘patent trolls,’ the courts have caused irreparable harm to them and may cause irreparable harm to other legitimate patent holders as well.”
Image Source: Deposit Photos
Vector ID: 46003303