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Supreme court: ‘Patent troll’ isn’t defamatory because nobody knows what it means

  • Part of the lawsuit filed by NH inventor David XXXX, claiming that descriptions of him as a "patent troll" are defamatory. The lawsuit includes this picture from a 2013 presentation to the Credit Union National Association.



Concord Monitor
Friday, August 16, 2019

CONCORD — Calling somebody a “patent troll” might be insulting but it’s not defamatory, even if it includes cartoon drawings of hairy, club-wielding trolls, the state Supreme Court ruled Friday in a years-long fight between a Claremont man and the banking industry.

The reason? There’s no exact definition of the term.

“We conclude that the challenged statement, that (the defendant) is a well-known patent troll, is one of opinion rather than fact,” wrote Justice Anna Hantz-Marconi in the unanimous decision, released Friday. The ruling that that the statement and other descriptions made in public forms were “mere rhetorical hyperbole … and not actionable.”

The case involves David Barcelou and his firm Automatic Transaction LLC. Barcelou has patents related to performing “automated transactions” online, which came out of his development in the 1990s of race-car simulators and subsequent effort to create automated tournaments online that would award the winner an immediate prize. Barcelou created a prototype of this in 1994 and expanded it to dispense cash.

In 2005, he was awarded a patent covering this technology and soon after started seeking licensing fees from places with ATM machines that give out cash, starting with the 7-Eleven chain and moving on to banks. He sent out many letters alleging patent violations to scores of banks and demanding quick payment.

According to court documents, Barcelou earned millions of dollars in licensing fees. But he also garnered increasing pushback from bankers who called his licensing threats a “shake-down” and “ripoff,” arguing that he wasn’t using the patents to do anything useful but only as an unsubstantiated threat to companies, which paid his fees only because the cost of litigation would be higher.

Barcelou said this push-back destroyed his licensing business and in 2016 filed suit in Sullivan County Superior Court against dozens of people and groups, including the American Bankers Association, Credit Union National Association and Mascoma Savings Bank. “Instead of matching (his) fair play by contesting the patent portfolio in appropriate forums, (they) launched a malicious, defamatory smear campaign in the public,” the suit argued, asking for monetary damages.

That banking push-back often included the term “patent troll,” which showed up frequently in presentations and news stories. Barcelou’s initial defamation lawsuit in Sullivan County Superior Court, filed against dozens of people and groups, included a PowerPoint presentation by a counsel for the Credit Union National Association titled “Hot Topics In Litigation” that included a cartoon of a club-carrying troll while discussing Barcelou’s case.

The issue showed up in Concord in 2014 as part of heated debate over a proposed bill to limit patent claims.

“It’s outright blackmail and we’re not going to be a party to it,” said Steve Christy, president of Mascoma Savings Bank, one of 97 banks and credit unions that challenged Barcelou’s claims, said at the time.

The issue also made it to the U.S. Congress, where a representative of the American Banking Association told a House subcommittee that Barcelou was a “patent troll,” whose demands cost “nothing more than the price of a postage stamp and the paper the claim is written on.”

In March 2018, Judge Brian Tucker threw out Barcelou’s lawsuit, handing down a summary judgment that said the phrase “patent troll” and other rhetorical characterizations are not the type of factual statements that can be the basis of a defamation claim. The comments, Judge Tucker wrote, are “of the ‘loose, figurative, or hyperbolic’ sort that is not actionable for defamation.”

Barcelou appealed the state Supreme Court, which on Friday agreed with that ruling.

“The plaintiffs contend that the context of … patent troll statements make them actionable because they contain ‘no language to alert the audience that the statements ... are expressions of opinion.’ However, the law does not force writers to clumsily begin each and every sentence with language such as ‘I think,’ or ‘in my opinion,’ for a statement to constitute an opinion,” Hantz-Marconi wrote in Friday’s opinion. “Patent troll statements are opinions (because) whether ATL is a patent troll cannot be ‘objectively verified.’ ”