May 22, 2014

Hearing highlights two sides of patent issue

May 23, 2014 – Lawmakers aired concerns about how to thwart abusive practices by "patent trolls" without impinging on legitimate patent holders during a subcommittee hearing Thursday on legislation drafted by House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade Chairman Lee Terry, R-Neb.

During the hearing, Terry reiterated his concerns about end users of patents receiving fraudulent demand letters, but he also said he wants to ensure that any legislative action will not hinder legitimate patent holders from asserting their rights. Hearing discussion surrounded civil penalties for "bad actors" – or patent trolls – and the specific disclosure requirements within Terry's bill.

Witnesses in Thursday's hearing included Reps. Jared Polis, D-Colo., and Tom Marino, R-Pa., and representatives from the Stop Patent Abuse Now Coalition, Federal Trade Commission and Application Developers Alliance, among others. NAFCU's letter sent Tuesday to urge patent reform was entered into the hearing record.

The witness for Application Developers Alliance asked that demand letters include details of exactly what infringement was being asserted and why, while a George Mason University witness said the disclosure requirements in Terry's bill could run afoul of constitutional protections on free speech.

Marino expressed disappointment that the Senate "fumbled the ball" on the patent troll abuse bill. On Wednesday, Senate Judiciary Chairman Patrick Leahy, D-Vt., announced he was withdrawing his anti-patent troll legislation from the committee's agenda due to a lack of "broad bipartisan support" on how to approach patent reform.

NAFCU is working in support of patent reform legislation, including House-passed H.R. 3309, the "Innovation Act," introduced by House Judiciary Committee Chairman Bob Goodlatte, R-Va., and two bills from Sens. Charles Schumer, D-N.Y., and Orrin Hatch, R-Utah, to help discourage patent trolls from filing frivolous lawsuits.