Last year, a New Hampshire state judge dismissed Barcelou's lawsuit but now the New Hampshire Supreme Court heard oral arguments about whether to overrule the lower court's decision and allow the lawsuit to move forward.
According to Ars Technica if Barcelou succeeds other alleged patent trolls will flock to New Hampshire to sue their detractors for libel. Critics warn that if ATL's lawsuit succeeds, it could chill public debate about patent reform and violate the First Amendment.
ATL owns several patents related to automatic teller machines but hasn't tried to commercialise its technology in over a decade.
Instead, the firm has been sending out demand letters to banks and credit unions threatening to sue them if they don't license the patents. At its peak between 2011 and 2012, ATL's licensing campaign generated more than $3 million in licensing revenue.
In 2012, a federal appeals court ruled that several of ATL's key patent claims were invalid. Still, the American Bankers Association wrote that ATL continued to "assert those patents and sue banks across the country, including banks that do not even have ATMs."
Some critics viewed this as classic patent troll behaviour.
The banks banded together to fight ATL and its attorney Bob Stier. Stier said the "Automated Transaction’s suit amounts to nothing more than a shakedown of community banks and that the company has intimidated more than 140 banks into settling.
ATL also targeted credit unions, prompting a response from the Credit Union National Association. A lawyer for the group, Robin Cook, began making presentations showing a "derogatory picture of a troll" and warning that troll tactics amounted to a "shakedown." The presentation listed ATL as a "well-known troll."
ATL responded by suing the ABA, CUNA, Robert Stier and his law firm. It sued several others who made similar comments—those labelling ATL a "troll" or describing ATL's demand letters as a "shakedown" or "outright blackmail." ATL's initial lawsuit was dismissed by a trial judge last year.
ATL attorney Steve Gordon urged the New Hampshire justices to overrule that lawsuit dismissal.
"The gist or sting of the statements at issue was that my clients were extortionists, shakedown artists, preying on small banks seeking to license patents that were of no value," Gordon said.
The main question confronting the Judges is whether it was proper to grant the defendants' motion to dismiss or whether the judge should have allowed the process to move forward and ruled on the legal merits.