RALEIGH, N.C. (AP) -- A legislative committee approved new rules Wednesday to crack down on patent abuse in North Carolina.
The Commerce and Job Development Committee approved a bill that would establish civil penalties for unfair assertions of patent infringement. The bill would classify unfair allegations of patent infringement as a deceptive trade practice and financially help companies who are wrongly sued.
The committee chairman, Wake Rep. Tom Murry, said the measure would help protect state businesses and innovation. Murry said the bill expands current rules and would primarily apply to technology patents. He said North Carolina would be one of the top 10 states in the country to pass a patent abuse bill.
"It rewards innovation by letting innovators know you've got protection in our courts," Murry said.
Attorney John Boswell said a false patent infringement claim cost his company, software maker SAS of Cary, $8 million.
"The idea behind the legislation is to level the playing field so when these shell companies ... attack North Carolina businesses it gives North Carolina businesses the opportunity to have some arrows in their own quiver."
The bill allows companies to recoup the cost of total damages, costs and fees up to $500,000. Companies who sue other companies on false claims of patent infringement try to make legal process as expensive as possible to force the other company to settle, Boswell said.
False assertions of patent infringement called "patent trolling" have increased nationwide 250 percent from 29 percent to 62 percent over the last two years, according to the committee.
The bill now goes to the House Judiciary Committee before it can be voted on by the full House.
The bill would classify unfair allegations of patent infringement as a deceptive trade practice and financially help companies who are wrongly sued.