WASHINGTON (3/19/15)--Sen. Chuck Grassley (R-Iowa) said he agreed with the sentiments of credit unions, among others, when it comes to passing meaningful legislation to deter abusive patent demand letters in a hearing Wednesday.
Grassley, chair of the Senate Judiciary Committee that conducted the hearing, quoted a letter from Iowa businesses, including the Iowa Credit Union League, in his opening remarks.
"Congress should act decisively if we want to alleviate the problems that are harming businesses both big and small," Grassley said. "This will strengthen our patent system and benefit inventors, businesses and consumers alike."
Sen. Patrick Leahy (D-Vt.), ranking member of the committee, referred to a CUNA witness at a previous hearing--John Dwyer, president/CEO of New England FCU, Williston, Vt.--when making the case for the need for patent reform.
Dwyer testified in December 2013 about the problems New England FCU faced because of patent litigation over the use of ATMs in its lobbies.
"Because of inadequate rules about transparency, John and other defendants could not tell if they were being targeted by the same corporation. Because of broadly written complaints, they could not tell whether the item accused of infringement was the credit union's own computer system, or the ATMs they had purchased from someone else.
"Because of lax rules about demand letters, the sender did not have to tell the defendants that many of the patents at issue had been declared invalid by the Federal Circuit and the Patent Office months before," Leahy said. "Instead of focusing on serving customers, John's credit union and the other targets spent months and hundreds of thousands of dollars in litigation."
CUNA signed a letter that was entered into the record for the hearing as well. It outlined financial institutions' concerns with the current patent litigation environment, the quality of patents granted by the U.S. Patent and Trademark Office and the continued assertion of low-quality patents by some entities with vaguely worded demand letters.
The letter also featured a list of key principles that, if enacted, would "improve the patent system, promote innovation and discourage the assertion of low-quality patents as a legitimate business model."