BILL NUMBER: S5368

SPONSOR: OBERACKER
 
TITLE OF BILL:

An act to amend the general business law, in relation to deceptive acts
and practices in the conduct of any business, trade or commerce

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill would amend the general business law, to prohibit any the
threatening of civil litigation or the making of demands for payment, by
non-attorney firms that troll the Internet claiming violations of intel-
lectual property rights.

 
SUMMARY OF SPECIFIC PROVISIONS:

This bill would add a new subdivision (k) to section 349 of the general
business law to:

*Expand the definition of deceptive act or practice in the conduct of
              

any business, trade or commerce, for any person, firm, corporation or
association or agent or employee thereof, to make an unsolicited threat
concerning an alleged violation of intellectual property rights. For
purposes of new definition, an unsolicited threat concerning an alleged
violation of intellectual property rights shall consist of:

   -threatening civil litigation, where such threat relates to an
alleged violation of intellectual property rights, unless the party so
threatened makes a payment of money to a person, firm, corporation or
association or agent or employee thereof, by a date certain; or

   -demanding payment from a person by a date certain, where such demand
relates to an alleged violation of intellectual property rights, unless
the person so demanded makes a payment of money by a date certain, and
that unless such initial demanded payment is made by the demandee by
such date certain, then such demanded payment will increase to a higher
demanded amount after such date certain.

*This new prohibited deceptive act or practice would not apply to an
attorney licensed to practice law before the courts of the state of New
York, and/or licensed to practice intellectual property law before the
federal courts of the United States, where such attorney has been duly
retained and employed by the registered holder of intellectual property
rights, in accordance with federal law, and is making such demand
consistent with ethical guidelines governing the conduct of attorneys,
in the course of such attorney's representation of such registered hold-
er, during a non-frivolous dispute for an alleged violation of such
registered holder's intellectual property rights.

 
JUSTIFICATION:

In recent years, a number of non-legal firms have begun trolling the
internet, mining websites for pictures and other material, which could
have intellectual property right protection. These nonlegal firms, then
contact the owners of the website and either threaten civil litigation
or demand payment for what they claim is an alleged violation of intel-
lectual property rights. This is despite the fact that such firms do not

represent any intellectual right holder nor do they exhibit any actual
violation of any intellectual property right under federal law.

As a result, this unscrupulous practice has resulted in many innocent
website owners having to incur unjustified legal expenses, or unknowing-
ly make a payment to these non-lawyer firms. Many of the practices used
by these firms are extortionary, threatening and unscrupulous. As such,
they should clearly fall into the purview of the state's deceptive trade
practices prevention statute (section 349 of the general business law)
which allows the attorney general, as well as the victim of these decep-
tive acts, to take action to combat this misconduct.

This bill would accordingly, classify such unscrupulous activity as a
deceptive trade practice and act, pursuant to this section of the gener-
al business law.

The bill would not conflict with the enforcement of actual violations of
intellectual property law, in that it would exempt any attorney licensed
to practice law before the courts of the state of New York, and/or
licensed to practice intellectual property law before the federal courts
of the United States, where such attorney has been duly retained and
employed by the registered holder of intellectual property rights, in
accordance with federal law, and is making such demand consistent with
ethical guidelines governing the conduct of attorneys, in the course of
such attorney's representation of such registered holder, during a non-
frivolous dispute for an alleged violation of such registered holder's
intellectual property rights.

 
PRIOR LEGISLATIVE HISTORY:

S. 4102 of 2019-2020
S. 9025 of 2017-2018.

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Immediately.