Collaborating for Meaningful Patent Demand Letter Legislation

Members of the Product Development and Global Technology (PD&GT) team, as well as Law and Public Policy and Global Government and Corporate Affairs, recently hosted Illinois Attorney General Lisa Madigan to raise awareness for legislation that protects Illinois businesses from “patent trolls” that profit from making false or misleading patent infringement claims, while protecting companies like Caterpillar seeking to protect intellectual property investments. Days after the Attorney General’s visit, the Governor signed the bill into law.

Madigan visited Caterpillar’s Tech Center in Mossville, Illinois, to highlight the benefits of Senate Bill 3405, which her office drafted with assistance from Caterpillar and other business and consumer protection advocates. “We need better protections for business owners facing fraudulent and costly demands from patent trolls,” Madigan said. “This legislation directly addresses these abusive practices, while ensuring legitimate patent holders maintain their ability to pursue infringement claims.”

The legislation was carefully created to crack down on patent trolls that have sent thousands of misleading letters to businesses demanding licensing payments or threatening legal action for supposedly violating a patent, but it was also created to ensure it does not limit the rights of legitimate patent holders, such as Caterpillar and other manufacturers or retailers in Illinois.

The typical target of a troll letter is an unsuspecting consumer or end user. In the letters, patent trolls fail to disclose basic information, including the actual owner of the alleged patent and the circumstances surrounding any alleged infringement. As a company that utilizes letters as a legitimate communication tool for potential violators of our patents, Caterpillar wants to ensure our rights are protected.

 “As far as how many patent communications Caterpillar sends, you can imagine that with more than 14,000 active or pending patents, and nearly $2 billion devoted to research and development efforts last year alone, we have a vested interest in this issue and are actively engaged in addressing it,” said Jim Blass, director of global product validation for PD&GT, who spoke at a press conference with Madigan about the efforts. “Caterpillar and the Illinois Attorney General’s office have made significant strides for the protection of our intellectual property, by developing model patent legislation to inhibit patent troll activity, while protecting good faith patent communications. The bill created by the Attorney General accomplishes that goal.”

Caterpillar invests in R&D to deliver quality products to our customers, while remaining competitive in the marketplace. The company has made significant investments in various technologies over the last few years – such as Tier 4 engine solutions, autonomous technology, connected jobsite solutions, including telematics, and worked on advancements to improve the fuel efficiency of our machines. All of these innovative solutions are made possible by protecting our intellectual property and worldwide patents. During her visit, the Attorney General was able to witness Caterpillar’s R&D efforts firsthand, with a tour of the Immersive Visualization Center, also known as “the Cave.”

“The U.S. Patent system protects and promotes innovation such as this, and facilitates communication between interested parties,” Blass said. “Our ability to protect that investment relies on open dialogue with others that may be infringing on those patents.”

While other states have passed laws to inhibit patent troll activity, many of these laws could adversely affect Caterpillar’s desire to send good faith patent communications. Such laws could potentially weaken patent enforcement, thereby opening the door for competitors to potentially copy our technology in the future.  In comparison, the Illinois law helps maintain a strong, robust patent enforcement system for Caterpillar, and provides model legislation as Caterpillar continues working in other states facing similar legislation.

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