A federal jury in Washington State recently found an individual patent holder and his former attorney liable for making a bad‑faith assertion of patent infringement under Washington law. The verdict in Valve Corp. v. Rothschild highlights the continued relevance of state anti‑patent‑troll statutes as a complement to federal patent remedies.[1]
The Valve Decision
Valve Corporation sued after receiving patent infringement demands it alleged were meritless and intended to extract a settlement rather than enforce legitimate patent rights. Specifically, Valve claimed Rothschild and his attorney threatened to sue for infringement of patents Valve had already licensed. Following trial, the jury concluded the inventor made bad faith assertions of patent infringement, resulting in liability under Washington’s Patent Troll Prevention Act and related consumer‑protection statutes.[2]
Although federal law governs patent infringement and validity, Washington’s statute — like similar laws enacted in many states — focuses on the conduct surrounding patent enforcement, particularly abusive demand‑letter practices. The verdict confirms liability is not limited to non‑practicing entities; individual patent holders and their attorneys may also face exposure where enforcement efforts lack a good‑faith basis.
State Anti‑Patent‑Troll Statutes
More than 30 states have enacted laws targeting bad‑faith patent assertions. While the statutes vary, they generally seek to deter abusive enforcement tactics that impose undue litigation or settlement pressure without meaningful analysis. However, Valve is the first reported case in which a court upheld a private right of action against a patent-holder.
These laws typically avoid deciding infringement or validity. Instead, they examine objective and subjective indicators of bad faith, including whether the patent holder conducted a reasonable pre‑suit investigation and provided specific, substantive information regarding the asserted patent and the accused product.
Common Indicators of Bad Faith
State statutes commonly identify the following conduct as indicative of bad faith:
- Demand letters that fail to identify asserted claims or explain the basis for infringement
- Payment demands that are disproportionate to the value of the patent or alleged infringement
- Litigation threats made without a genuine intent to sue
- Assertions made without reasonable investigation of the accused product or prior art
- Mass or repetitive demands lacking individualized analysis
Remedies typically include injunctive relief, damages, civil penalties and attorneys’ fees.
Key Takeaways
Although the Valve verdict may be an outlier based on unusual circumstances, it illustrates legal risks associated with patent enforcement strategies, particularly at the demand‑letter stage. Patent owners should ensure that infringement assertions are supported by documented, good‑faith analysis and that communications are specific, accurate and proportionate.
For recipients of questionable patent demands, state anti‑patent‑troll statutes may provide meaningful leverage even before federal litigation is initiated. Early evaluation of potential state‑law exposure can inform response strategies and potentially shift negotiating dynamics.
[1] Valve Corp. v. Rothschild, No. 2:23‑cv‑01016‑JNW, U.S. District Court for the Western District of Washington.
[2] RCW 19.350.020–.050 (Washington Patent Troll Prevention Act) (prohibiting bad‑faith assertions of patent infringement).
