Pub. 6 2016 Issue 1

T E CHNOLOGY IS UPENDING THE WORKFLOW AND PRO- CESSES IN THE FINANCIAL SERVICES INDUSTRY. TASKS ONCE HANDLED WITH PAPER MONEY, BULKY COMPUT- ERS, AND HUMAN INTERACTION ARE NOW BEING COMPLETED ENTIRELY ON DIGITAL INTERFACES. Almost every type financial activity-from banking to pay- ments to wealth management can now be completed with a few quick touches on your smart phone. By making services like payments, lending, and deposits available on mobile plat- forms, banks have been able to grow their market base while cutting costs at the same time. While these new disruptive technologies have allowed banks to reach customers they wouldn’t otherwise have access too, these new technologies have also made banks a magnet for patent trolls. “Patent Trolling” is the process of filing a claim of patent infringement against an entity, despite the fact that the claim- ant does not manufacture or supply the product or service in question. The risk of abusive patent infringement claims im- pact nearly every industry, and is a serious concern for banks of all sizes. In an effort to stop patent trolling and incomprehensible de- mand letters, Congress in 2011 enacted the American invents Act, which increased banks’ ability to challenge the validity of existing patents through use of several new tools. These tools can greatly reduce banks' costs to contest an infringe- ment claim while expediting the resolution process, because the patent office must rule on patent invalidity cases within 18 months. Yet, despite attempts by Congress to reform overly broad business methods patents, patent trolls continue to threaten litigation and make licensing fee demands. To help stop this abusive business practice, the Arizona Bankers Association with the help of the Arizona Attorney General’s Office, The Arizona Tech Council, has proposed legislation this session that would vest the Arizona Attor- ney General with enforcement authority under the Arizona Consumer Protection Act to hold fraudulent patent trolls accountable. The Arizona Patent Troll Prevention Act is modeled after legislation that has been enacted in 26 states. Under this act, a person may not make assertions of patent infringement in bad faith. An assertion of patent infringement in bad faith is demonstrated when a person or business entity sends a de- mand threatening a target with litigation while asserting that the target infringed a patent or that the target should obtain a license in order to avoid litigation. Bad faith factors include; a demand that does not contain specific information such as a patent number, the name and address of the patent owner, or facts relating to specific areas in how the target is infringing the patent, or failing to provide the preceding information up request. In creating this legislation, the Association was particu- larly mindful not to stifle innovation or inventors' legitimate property rights. The Association firmly believes that this legislation will protect the legal rights of both Arizona banks and Arizona business, while maintaining a fair and legitimate operation for our intellectual property system that is so criti- cal to the Arizona economy. w By STEVEN KILLIAN Patent Troll Under the Copper Dome 10 www.azbankers.org