A coalition of companies, trade associations and startups concerned about delays in the U.S. Senate in enacting patent law reforms to address allegedly abusive litigation filed by patent assertion entities (PAEs) has written to the chair and ranking member of the Senate Committee on the Judiciary calling for “continued efforts until the job is done and the bill becomes law.” The Coalition for Patent Fairness calls for a law that would curb abusive demand letters, “[u]ncloak trolls that hide behind shell corporations” and require PAEs to “pay when they file frivolous cases.” Among other matters, the interest groups call for the legislation to impose transparency and disclosure requirements on parties bringing patent infringement lawsuits.
While 27 states have considered measures to curtail the vaguely worded demand letters that PAEs use to convince small businesses to pay licensing fees, just 10 have apparently passed such laws and in another five states, similar measures are awaiting a governor’s signature. States have little authority over patent rights and disputes, which has led the attorneys general (AGs) in 42 states to urge the U.S. Congress to pass patent reform. The state bills purportedly allow some regulation of PAEs that use demand letters as a key component of their strategy, requiring that they disclose patent ownership or prove they have adequately investigated the target’s alleged infringement to avoid a determination that they have used their patents in “bad faith.”
Meanwhile, U.S. Rep. Lee Terry (R-Neb.) has circulated a discussion draft of a bill that would “require patent demand letters to include certain basic information to help companies determine whether a letter is legitimate,” give the U.S. Federal Trade Commission the authority to levy fines for fraudulent patent demand practices and give state AGs the power to enforce the law. The proposal was scheduled to be considered during a May 22, 2014, subcommittee meeting. The House of Representatives has already passed a patent reform law (H.R. 3309), and the Senate is currently considering S. 1720. See National Association of Federal Credit Unions News Release, May 13, 2014; arstechnica.com and House Energy & Commerce Committee News Releases, May 15, 2014.