New Hampshire Supreme Court Slaps Down Patent Troll’s Defamation Lawsuit

Automated Transactions LLC (“ATL”), a small patent assertion entity, has collected millions enforcing a portfolio of patents relating to automated teller machines. After being labeled a “patent troll” by a number of critics of ATL’s enforcement practices, ATL filed a defamation suit in New Hampshire state court against 12 individuals and trade groups claiming that the cognomen was libelous. Earlier this month, the New Hampshire Supreme Court affirmed the dismissal of the suit finding the term “patent troll” to be a non-actionable opinion and rhetorical hyperbole.

This case stems from the patents of inventor David Barcelou, who claims to have come up with the idea of connecting ATMs to the internet. In 1994, Barcelou created a prototype of an automated gaming machine, which included ATM-like features such as the ability to immediately dispense cash to winners. Barcelou filed patent applications and was ultimately granted an ATM-related patent by the U.S. Patent and Trademark Office in 2005 and several other patents in the following years.

Barcelou’s efforts to commercialize his invention were largely unsuccessful and his “Automated Tournament Machine” never caught on. Barcelou later formed ATL, made ATL the exclusive licensor of the patent, and began licensing the patent and bringing infringement litigation. ATL filed infringement suits against numerous banks and credit unions allegedly using Barcelou’s patent in their ATMs. Additionally, nearly 200 different companies paid ATL roughly $3 million in licensing fees to avoid litigation.

ATL’s targets and several trade groups began vocalizing their criticism of ATL and Barcelou. One of the defendants in the slander lawsuit, an attorney who represented a number of the financial institutions targeted by ATL, said in an interview with the Boston Business Journal that ATL’s practices were “nothing more than a shakedown” and referred to ATL as a “patent troll” on his website. Another defendant, the Credit Union National Association, gave a presentation which contained a cartoon picture of a troll and referred to ATL as “a well-known patent troll.” A third defendant, the American Bankers Association, gave testimony before the United States Senate Committee on the Judiciary in which it referred to ATL as a “patent troll” that resorts to “extortive” practices “in an effort to extort payments” from financial institutions.

The trial court dismissed ATL’s libel claims finding in each instance that the statements were rhetorical hyperbole and nonactionable opinion. ATL appealed up to the New Hampshire Supreme Court who heard oral arguments in the case earlier this year. In its opinion, the Court affirmed dismissal of the claims, agreeing with the trial court that the statements were merely rhetorical hyperbole and opinions.

The Court explained that the moniker “patent troll” while disparaging is not libelous. The statement that someone is a patent troll “cannot be objectively verified” and as such is a statement of “opinion rather than fact.” To demonstrate its point, the Court examined various definitions of the term patent troll as well as disagreements over who could properly be characterized as one.

The Court rejected ATL’s argument that referring to its licensing efforts as “extortive” and accusing it of attempt to “extort payments” accused it of committing a crime and as such were capable of being proven false. The Court concluded that it was clear from the American Bankers Association’s testimony that, although it used the terms pejoratively, it was not attempting to accuse ATL of literally committing the crime of extortion.

Similarly, the Court rejected ATL’s arguments that the statements that ATL was a “patent troll” whose practices amounted to a “shakedown” were actionable because the statements contained no language to alert the audience that the statements were expressions of opinion. The Court explained that “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.” Rather than looking for magic words, the focus of the analysis is on whether the statements can be “objectively verified.”

You can read the Court’s entire opinion here.

Nonactionable opinion and rhetorical hyperbole are just two of a number of defenses that can be asserted to defeat a claim of defamation of character. Asserting these defenses requires a highly fact-intensive inquiry as well as in-depth knowledge of libel and First Amendment jurisprudence. The best defamation lawyers will know how to collect, analyze, and present evidence in support of the various defenses to defamation as well as how to analogize existing case law to the allegedly defamatory statements at issue.

Our DuPage County defamation attorneys defend individuals’ First Amendment and free speech rights to post on Facebook, Yelp and other websites information that criticizes businesses and addresses matters of public concern. You can view a federal court decision where we prevailed in a libel per se claim asserting the innocent infringer defense here. Here you can find an arbitration decision where we successfully defended our client’s right to post negative opinions on YouTube about a used car dealer. We recently required a defendant who publicized an allegedly false lawsuit concerning our client to provide an apology and full retraction as part of a confidential financial settlement following our filing of a $16,000,000.00 defamation per se suit in federal district court.

The attorneys at Lubin Austermuehle have over thirty years’ experience defending and prosecuting defamation, slander, libel and cyber-smear claims. We are knowledgeable regarding the changes and complexities of this evolving area of the law. We are committed to fighting for our clients’ rights in the courtroom and at the negotiating table in a variety of slander and business law matters. With offices conveniently located in Chicago and Elmhurst, Illinois, we have successfully litigated and settled defamation, trade libel, internet defamation, and cyber smearcases for clients all over the Chicago area. To schedule a consultation with one of our skilled attorneys, you can contact us online or give us a call on our toll-free number at (833) 306-4933 or locally at (630) 333-0333.