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Ahead of today's Senate Commerce subcommittee hearing on the deceptive practices by patent assertion entities, NAFCU Vice President of Legislative Affairs Brad Thaler urged subcommittee leaders to address patent system weaknesses, which often lead "patent trolls" to target credit unions and other small businesses.

"A growing number of credit unions are reporting receipt of demand letters from law firms representing patent assertion entities claiming patent infringement with an option to settle or face litigation," Thaler wrote Wednesday to Senate Commerce Subcommittee on Consumer Protection, Product Safety and Insurance Chairman Claire McCaskill, D-Mo., and Ranking Member Dean Heller, R-Nev.

Thaler wrote of the importance of The Transitional Program for the Review of Covered Business Method Patents (CBM program) and how it is an important tool for credit unions in seeking fairness in patent infringement situations and should be expanded to include the pre-litigation process.

The current process for dealing with patent infringement claims is expensive, especially for smaller credit unions, Thaler wrote. To ease the burden of this process for credit unions, NAFCU recommends:

• a fee-waiver provision that increases the opportunity for small institutions to protect themselves from "patent trolls";
• enhanced pleading standards and limits on discovery that would make it faster and more cost effective to prove that a patent is of poor quality in instances where it leads to frivolous infringement litigation; and
• the removal of the sunset provision in the current law.

Last week, Thalerwrote the leaders of the House Judiciary Committeein support of reforms within H.R. 3309, "Improving the Patent System to Promote American Innovation and Competitiveness." H.R. 3309 creates "a more efficient patent system, including NAFCU-supported language that would help protect credit unions from baseless litigation involving questionable business method patents," Thaler wrote.