Newsroom

April 16, 2015

NAFCU, others offer improvements to patent reform bill

NAFCU, with other financial trade organizations, said a House subcommittee bill aimed at addressing patent-assertion entities that send patent-demand letters in bad faith is a good starting point but needs improvement.

The House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade held a hearing Thursday on the "Targeting Rogue and Opaque Letters (TROL) Act," which is a draft bill to address demand letters.

NAFCU, along with the American Bankers Association, The Clearing House Association, CUNA, Financial Services Roundtable and the Independent Community Bankers of America, sent a joint letter to subcommittee Chairman Michael Burgess, R-Texas, and Ranking Member Jan Schakowsky, D-Ill., expressing concerns with the legislation's definition of "bad faith." The definition is "very restrictive and should be either removed altogether or expanded," the letter stated.

Hearing witnesses from the Patent Reform Project, United for Patent Reform and Baltimore University School of Law and others agreed that patent troll behavior is a problem in need of a legislative solution. They said the legislation's definition of "bad faith" needed to be revisited due to the loopholes it provided to the patent trolls sending out frivolous demand letters.

In Thursday's letter, NAFCU and other trades said the bill should allow states that already have laws in place to discourage bad-faith demand letters to continue using those laws to "protect banks, credit unions, other small businesses and their customers from abusive behavior by patent trolls."

NAFCU and others are pressing lawmakers for reforms that would:

  • ease the cost and burden of patent litigation and make the system more efficient;
  • require demand letters to provide more details about the patent and the assertion entity; and
  • improve post-grant review of patents, for example, by making permanent the "covered business method" review and making it more usable for smaller entities.