📋 Overview

You have received a patent demand letter claiming your product or service infringes one or more patents. While some patent assertions are legitimate, many are sent by "patent assertion entities" (PAEs) or "patent trolls" that acquire patents solely to extract licensing fees through threats rather than practicing the technology themselves.

Patent Trolls

Entities that buy patents to send demand letters and file lawsuits, without making products. Often target small businesses that will settle cheaply.

Vague Demand Letters

Bad-faith letters often lack specifics: no patent number, no claim chart, no identification of infringing product/feature.

State Anti-Troll Laws

Over 35 states have enacted laws making bad-faith patent assertions actionable, with penalties including damages and attorney fees.

Key Questions to Answer

  • Who sent the letter? - Operating company or non-practicing entity (NPE)?
  • What patent(s) are identified? - Number, title, relevant claims?
  • What product/feature is accused? - Specific identification or vague reference?
  • Is there a claim chart? - Mapping patent claims to your product?
  • What is demanded? - License fee, royalty, cease use, or undefined "resolution"?
  • What is the deadline? - Reasonable time to investigate or pressure tactic?
$750
Patent Demand Response Package

Letter analysis, bad-faith indicator assessment, state statute review, and professional response letter.

Schedule Review

🚩 What Makes a Letter Look Bad Faith

State anti-troll statutes identify specific factors that indicate bad-faith patent assertions. If a demand letter exhibits multiple red flags, it may be actionable under state law.

Bad-Faith Indicator Table

Red Flag What It Looks Like Why It Matters
No Patent Number "We own patents covering this technology" without identifying which patents Impossible to evaluate validity or scope of claims
No Claim Chart No mapping of patent claims to accused product features Legitimate assertions explain how claims read on product
No Accused Product ID "Your products infringe" without identifying which product or feature Cannot evaluate infringement without knowing what is accused
Unreasonably Short Deadline "Respond within 7 days or we will sue" Patent evaluation requires weeks; short deadlines are pressure tactics
Mass-Mail Style Generic letter obviously sent to many recipients Suggests assertion campaign rather than specific infringement concern
No Litigation History Entity sends many demands but rarely files suit Suggests settlement extraction model, not legitimate enforcement
Demand for Nuisance Payment License fee set below cost to fight ("$10K to make this go away") Economic extortion model, not reasonable royalty
Shell Company Sender Demand from obscure LLC with no website or products Patent assertion entities often use shell companies
Threats to End Users Letters sent to customers rather than manufacturer Targeting unsophisticated recipients is a bad-faith tactic
False/Misleading Statements Overstating patent scope, claiming judgments that do not exist Material misrepresentations indicate bad faith

Count Your Red Flags

The more bad-faith indicators present in a demand letter, the stronger your position. Document each indicator carefully - this evidence supports both your response and potential counterclaims under state anti-troll statutes.

Legitimate vs. Bad-Faith Assertions

Legitimate Assertion Signs

Specific patent identified, claim chart included, accused product/feature named, reasonable response time, entity has products or litigation history, professional engagement.

Bad-Faith Assertion Signs

Vague patents, no claim mapping, generic accusations, short deadlines, shell company, mass-mailed, nuisance pricing, threats without substance.

⚖️ State Bad-Faith Patent Assertion Statutes

Beginning with Vermont in 2013, over 35 states have enacted laws creating liability for bad-faith patent demand letters. These statutes provide powerful defensive tools.

Vermont: The Pioneer Statute

Vermont 9 V.S.A. Section 4197

First state bad-faith patent assertion statute (2013)

Creates private right of action and AG enforcement authority against bad-faith patent assertions. Key provisions:

  • Private Right of Action: Target may sue asserter for damages
  • Attorney General Enforcement: AG may bring action on behalf of state
  • Civil Penalties: Up to $50,000 per violation
  • Costs and Fees: Prevailing defendant recovers costs and attorney fees
  • Bond Requirement: Court may require asserter to post bond

Multi-State Trend

Following Vermont's lead, states across the country enacted similar protections. Key examples include:

Alabama

Ala. Code 8-12B-1

Private right of action with actual damages, costs, and reasonable attorney fees. AG enforcement available.

Colorado

Colo. Rev. Stat. 6-12-101

Enforceable by AG and private parties. Penalties include actual damages and costs.

Georgia

O.C.G.A. 10-1-770

Private cause of action. Rebuttable presumption of bad faith if letter lacks specifics.

Idaho

Idaho Code 48-1701

Similar to Vermont model. Actual damages, attorney fees, and civil penalties available.

Illinois

815 ILCS 505/2QQQ

Added to Consumer Fraud Act. AG enforcement with civil penalties.

Louisiana

La. R.S. 51:1428

Extensive bad-faith factors enumerated. AG and private enforcement.

Tennessee

Tenn. Code 29-10-101

Private action for actual damages and attorney fees. Bond may be required.

Texas

Tex. Bus. & Com. Code 17.952

AG enforcement only (no private right of action). Civil penalties up to $50,000.

Finnegan Overview Resource

The law firm Finnegan maintains a comprehensive State Patent Troll Laws chart tracking all state statutes, their key provisions, and enforcement mechanisms. Consult this resource to identify protections available in your jurisdiction.

🛡️ Defensive Posture: Force Specificity

The key defensive strategy is to force the asserter to provide specifics. A well-crafted response demands information that legitimate patent holders readily provide - and that bad-faith asserters cannot or will not provide.

Information to Request

📄 Patent Information

  • ✓ Patent number(s) at issue
  • ✓ Specific claims asserted (not entire patent)
  • ✓ Current ownership chain/assignment history
  • ✓ Patent prosecution history (if available)

📊 Claim Mapping

  • ✓ Claim chart mapping claims to accused product
  • ✓ Identification of accused product/feature
  • ✓ Claim construction positions
  • ✓ Explanation of how each claim element is met

⚖️ Litigation History

  • ✓ List of all lawsuits filed on these patents
  • ✓ Outcomes of prior litigations
  • ✓ Claim construction rulings from prior cases
  • ✓ Number of demand letters sent on these patents

💰 Licensing Terms

  • ✓ Basis for royalty/license fee calculation
  • ✓ Comparable license agreements
  • ✓ FRAND commitments (if applicable)
  • ✓ Identity of other licensees

Building the Bad-Faith Record

Document Everything

Your response letter is not just a reply - it is the first step in building a record for potential counterclaims. When the asserter fails to provide requested information, their non-response becomes evidence of bad faith.

Send requests via certified mail. Set reasonable deadlines (30-45 days). Follow up in writing if no response. Document the pattern.

Invoke State Anti-Troll Statutes

Explicitly reference applicable state statutes in your response. Warn the asserter that bad-faith assertions expose them to statutory penalties, attorney fee-shifting, and bond requirements.

Research which state's law applies (your state of incorporation, state where you conduct business, or asserter's state). Multiple states may provide protection.

Preserve Pre-Suit Rights

Many jurisdictions allow the target of bad-faith assertions to file declaratory judgment actions. Your response preserves these options while potentially deterring bad-faith asserters who fear scrutiny.

Consider whether filing a declaratory judgment action makes strategic sense, particularly if the asserter has a pattern of sending demands but not filing suits.

Why This Strategy Works

Bad-faith asserters rely on targets who pay quickly to avoid the hassle. A detailed, documented response signals that you will not be an easy target. Many PAEs simply move on to easier prey rather than engage with sophisticated responses.

📝 Response Letter Templates

These templates are designed to force specificity, document bad-faith indicators, and preserve your legal rights. Customize for your situation.

Demand for Specificity Response
Re: Response to Your Patent Demand Letter Dated [DATE] I am in receipt of your letter dated [DATE] alleging that [COMPANY NAME]'s products or services infringe patents owned or controlled by [ASSERTER NAME]. Before we can meaningfully evaluate your claims, we require the following information: PATENT IDENTIFICATION 1. The specific patent number(s) you allege are infringed 2. The specific claim(s) within each patent that you assert 3. Documentation of current patent ownership and chain of title 4. Maintenance fee payment status confirming patents remain in force CLAIM MAPPING 5. Identification of the specific product(s) or service(s) you allege infringe 6. For each asserted claim, a detailed claim chart mapping each claim element to specific features of the accused product or service 7. Your claim construction positions for disputed claim terms 8. Technical explanation of how each claim element is allegedly met PRIOR HISTORY 9. A list of all lawsuits filed asserting these patents 10. Outcomes of those lawsuits, including any claim construction rulings 11. The number of demand letters sent regarding these patents 12. Identity of any parties who have taken licenses to these patents LICENSING BASIS 13. The factual and legal basis for your proposed royalty/license fee 14. Comparable license agreements supporting your valuation 15. Whether the patents are subject to any FRAND or similar commitments Please provide this information within forty-five (45) days. Without this information, we cannot evaluate your infringement contentions and must treat your demand as lacking good-faith substantiation. We note that [STATE] has enacted legislation (cite: [STATE STATUTE]) creating liability for bad-faith patent assertions. Bad-faith factors include failure to identify patents, failure to provide claim charts, unreasonable deadlines, and other indicia that your letter may exhibit. We reserve all rights under applicable state and federal law. We look forward to your substantive response. Sincerely, [NAME/TITLE] cc: File (preserving record of communication)
Bad-Faith Warning Response
Re: Bad-Faith Patent Assertion Warning - Your Letter of [DATE] I am responding to your demand letter alleging patent infringement. After careful review, we have identified multiple indicators of bad-faith patent assertion as defined under state law. DEFICIENCIES IN YOUR LETTER Your letter fails to: [ ] Identify specific patent number(s) [ ] Identify specific claims asserted [ ] Identify specific accused product(s) or feature(s) [ ] Include any claim chart or infringement analysis [ ] Provide reasonable time to investigate (your [X]-day deadline is unreasonable) [ ] Explain basis for licensing demand STATE LAW WARNING Your demand letter exhibits characteristics of bad-faith patent assertion as defined under [STATE] law ([CITE STATUTE]). Under this statute, bad-faith patent assertions are actionable, and targets may recover: - Actual damages - Costs and reasonable attorney fees - Civil penalties up to [AMOUNT] per violation - Injunctive relief Additionally, courts may require bad-faith asserters to post a bond. DEMAND We demand that you: 1. Immediately cease making bad-faith patent assertions against us 2. Provide full substantiation as outlined in our prior correspondence within 30 days if you contend your assertion is made in good faith 3. Confirm in writing that you will not pursue this matter without proper substantiation Failure to substantiate your claims or continued bad-faith conduct will result in us pursuing all available remedies, including counterclaims under state anti-troll statutes. We reserve all rights. Sincerely, [NAME/TITLE]
Non-Infringement Position Response
Re: Response to Patent Infringement Allegations - [PATENT NUMBER(S)] We have completed our preliminary review of your infringement allegations regarding U.S. Patent No. [NUMBER]. NON-INFRINGEMENT POSITION Based on our analysis, [COMPANY NAME]'s [PRODUCT/SERVICE] does not infringe the asserted patent(s). Specifically: 1. [CLAIM X] requires [CLAIM LIMITATION]. Our product [DOES NOT INCLUDE THIS / OPERATES DIFFERENTLY BECAUSE...]. 2. [ADDITIONAL NON-INFRINGEMENT ARGUMENTS AS APPLICABLE] VALIDITY CONCERNS We have also identified potential invalidity issues with the asserted patent(s): 1. [PRIOR ART REFERENCE] appears to anticipate or render obvious claim [X] 2. [ADDITIONAL VALIDITY ISSUES AS APPLICABLE] RESPONSE We decline your licensing demand. We are confident in our non-infringement and invalidity positions and will vigorously defend any litigation. We note that frivolous patent assertions expose asserters to liability under state anti-troll statutes and potential fee-shifting under 35 U.S.C. 285. We will pursue all available remedies if you file a baseless lawsuit. If you disagree with our analysis, please provide a detailed claim chart explaining your infringement theory. We are willing to engage in good-faith discussions with substantiated claims. Sincerely, [NAME/TITLE]

🚀 Next Steps

Step 1: Analyze the Letter

Review the demand letter against the bad-faith indicator table. Count and document each red flag present.

Step 2: Research the Asserter

Search PACER for litigation history. Check USPTO for patent ownership. Research the entity online.

Step 3: Identify State Protections

Determine which state anti-troll statutes apply based on your location and the asserter's location.

Step 4: Send Response

Send demand for specificity via certified mail. Set 30-45 day deadline. Keep copies of everything.

If They Provide Information

  • Evaluate claim charts and infringement theory with technical team
  • Research patent validity (prior art, prosecution history)
  • Consider engaging patent counsel for detailed freedom-to-operate analysis
  • Evaluate design-around options if infringement risk exists

If They Do Not Respond or Sue

  • No Response: Document their failure to substantiate. This strengthens bad-faith counterclaims if they later sue.
  • They Sue: Consider immediate motions including transfer, Rule 11 sanctions, and fee-shifting under 35 U.S.C. 285.
  • Filing First: In some cases, filing a declaratory judgment action in your preferred forum may be advantageous.

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📚 Legal Resources

Federal Law

  • 35 U.S.C. 285: Exceptional case attorney fee awards in patent cases
  • Octane Fitness v. ICON Health (2014): Lowered standard for exceptional case findings
  • TC Heartland v. Kraft (2017): Limited patent venue to defendant's state of incorporation

Key State Statutes

  • Vermont 9 V.S.A. 4197: Pioneer state anti-troll statute
  • Georgia O.C.G.A. 10-1-770: Rebuttable bad-faith presumption
  • Texas Bus. & Com. Code 17.952: AG enforcement statute
  • Tennessee Code 29-10-101: Private right of action model

Research Resources

  • Finnegan State Patent Troll Laws Chart: Comprehensive multi-state reference
  • USPTO Patent Full-Text Database: Research patent claims and prosecution history
  • PACER: Federal court records including patent litigation history
  • Unified Patents: Prior art and patent assertion entity tracking