New Georgia Statute On Bad Faith Patent Cases May Discourage Both Weak And Strong Cases From Being Brought In Georgia

Plaintiff Walter Farmer ("Farmer") initiated suit in September 2014 asserting infringement of claim 1 of his U.S. Patent No. 7,362,007 (the "'007 Patent"), issued April 22, 2008, and covering uninterruptable power supply technology ("UPS") products against Alpha Technologies, Inc. ("Alpha"). Alpha moved pursuant to a relatively new Georgia statute, O.C.G.A. §10-1-772 et seq., for an order requiring Farmer to post a $250,000 bond because of Farmer's alleged bad faith patent assertion. The motion was addressed by Special Master James L. Ewing, IV in a 29-page Recommendation and Opinion that was adopted by Judge Leigh Martin May on December 9, 2015.

Special Master Ewing detailed a series of communications over several months beginning in April 2014 between the parties whereby Farmer informed Alpha of the perceived infringement by providing a claim chart and Alpha requested time to investigate the matter. After Alpha missed its own September deadline, Farmer initiated action but held off service in a further effort to resolve the matter. Alpha requested that Farmer hold off service until December 5 by which time it would substantively respond. Alpha submitted a response on December 5 denying infringement and asserting invalidity (without providing a claim chart). Alpha further asserted that it appeared "that Mr. Farmer failed to conduct an adequate investigation and analysis" though no reasoning was provided for this conclusion.

Farmer filed a return of service on January 29, 2015. The Special Master then considered O.C.G.A. §10-1-772 in connection with Alpha's motion. That statute sets for nine factors that may be considered tending to support the requirement of bond and seven that may be considered in denying bond.

The nine factors potentially favoring requirement of a bond are:

(1) The demand letter fails to include the patent number, the name and address of the owners or any assignees, and fails to show specifically how the recipient's products are covered by claims of the patent;

(2) Prior to sending the demand letter no analysis comparing the claims to the accused products was done or the analysis failed to identify specific areas in which the accused products were covered by claims;

(3) The recipient requested information omitted from the demand letter (as specified in 1) and that information is not provided;

(4) The demand letter demands a license fee or response within an unreasonably short time;

(5) A license is offered for an amount...