WASHINGTON (5/19/14)--While a U.S. Senate bill to fight patent law abuses is debated in the Senate Judiciary Committee, the House now has its own legislation intended to crack down on "trolls" waving frivolous patent assertion letters around.
Rep. Lee Terry (R-Neb.) last week released draft legislation to address illegitimate patent demand letters where so-called "patent trolls" use low-quality patents in an effort to extract settlements from credit unions and other businesses. Terry, chairman of the Commerce, Manufacturing, and Trade Subcommittee of the House Energy and Commerce Committee, plans to hold a hearing on the bill on Thursday.
Many trolls are aware that the cost of hiring a patent attorney is a deterrent to credit unions and others, and price their proposed licenses in such a way that they are sure to be lower than the cost of counsel to evaluate the demand.
"Patent trolls cost American companies tens of billions of dollars each year, and are threatening job creation and innovation," Terry said when announcing his new bill.
Terry said his draft legislation would increase transparency and accountability to help expose and prevent fraudulent infringement claims. It would do so by requiring patent demand letters to include certain basic information to help companies determine whether a letter is legitimate.
The bill also would increase the Federal Trade Commission's authority to levy fines on fraudulent patent demand practices and provide state Attorney General enforcement of the federal standard.
Terry's bill is a follow-up to broad patent litigation reform approved by the House last December, which did not address the issue of abusive patent assertion letters.
The Senate Judiciary bill, introduced by its chairman, Sen. Patrick Leahy (D-Vt.), is called the Patent Transparency and Improvements Act (S. 1720). Other Senate bills that would address patent troll issues include the Patent Litigation Integrity Act of 2013 (S. 1612), the Patent Quality Improvement Act of 2013 (S. 866) offered by Sen. Charles Schumer (D-N.Y.), and the Transparency in Assertion of Patents Act (S. 2049) introduced by Sen. Claire McCaskill (D-Mo.) .
The Credit Union National Association has urged lawmakers to act to curb the patent system abuses. "Reforms are desperately needed. This growing problem will not be solved until Congress passes bipartisan legislation that makes clear patent trolls can no longer get away with abusing the system," CUNA has said in letters of support for such legislation.
CUNA and the state credit union associations have been active on every level urging lawmakers and the Obama administration that patent reform is needed.