Texas Senate Passes Bill Creating Deceptive Trade Practice Act Liability for Patent Demand Letters

Originally published by Michael C. Smith.

Texas Lawyer’s Angela Morris has an article out today on the Texas Senate’s recent action passing a bill that would authorize the Texas Attorney General to sue entities that send letters in bad faith to end users alleging that people infringe on their patents. I had an opportunity recently to analyze both the Nichols bill that passed the Senate and another bill introduced in the House for Tex-ABOTA, so the issue is one that I am interested to see the progress on.

SB 1457 adds a section to the Texas Deceptive Trade Practices Act prohibiting someone from sending end users demand letters in bad faith, which it defines as a communication that falsely states that the sender had filed a lawsuit, made a claim that was objectively baseless because the sender didn’t have a right to license or enforce the patent, or because the patent was invalid, unenforceable or expired. Additionally, any letter must list the patent holder’s identity, the patent, and the way that the end user had allegedly infringe the patent. If the AG chooses to sue a violator, it could seek injunctive relief, civil penalties, reimbursement to the state for investigation and prosecution costs, and restitution to victims for legal and professional expenses.

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