The Bumpy Road to Patent Troll Reform

July 11, 2014

The effort to combat patent trolls, until recently, has been one of the few bipartisan initiatives in the Congress this year. There has been general consensus that Patent Assertion Entities (PAE’s) often dubbed patent trolls, who do not produce or manufacture products, increasingly have been asserting broad and often highly questionable patent infringement claims that cost large and small companies across the U.S. multi-billions of dollars annually.

Earlier this year, the House of Representatives passed a bipartisan anti-patent troll bill with a vote of 325-91. The bill required patent holders to disclose more information in their demand letters and provided defendants greater tools to combat patent trolls during litigation. The Senate Judiciary Committee then also took up a broad patent troll bill. The Judiciary Committee held hearings and again, bipartisan support emerged. However, as the Committee prepared to move the bill forward for a vote, it was suddenly taken off the table. This shift in momentum stunned many lawmakers and sent a clear message that the many stakeholders involved were no longer fully in consensus.

Yesterday, the House Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing and Trade passed a far more limited and focused proposal 13-6 that specifically addresses issues posed by demand letters from patent trolls.

This most recent bill, titled, “Targeting Rogue and Opaque Letters (TROL) Act of 2014”, is sponsored by the Chairman of the Subcommittee, Rep. Lee Terry (R, NE). It states that certain types of patent demand letters that fail to have adequate specificity are unfair or deceptive acts or practices under the FTC Act. It also clarifies the authority of the FTC and state attorneys general to prosecute those sending abusive demand letters, while preempting the increasing number of patent troll state laws already in place.

Yesterday’s Subcommittee vote highlighted a seeming growing split between Republicans and Democrats on this issue. One main point of contention is the preemption of current state laws. Rep. Welch (D, VT), during the debate on the bill, asserted that the Attorney General’s office in his state uses a stricter set of laws than this new bill would provide, and therefore preemption should not be required. Another issue Democrats on the Subcommittee stressed is their claim that the FTC, state AG’s, and other relevant stakeholders were not fully invited to participate in discussions on the final version of the legislation. However, those on the other side of the aisle, in particular the Chairman of the Subcommittee, Rep. Terry, maintained that this bill is the product of very divergent interests coming together to solve the problem. It now remains to be seen whether the full committee will act on the bill.

The ANA believes that the patent troll issue needs to be resolved quickly. The ANA has many members who are the largest patent holders in the U.S. Many of our members also have been the victims of patent trolling, highlighting the need for balance in this process. The ANA is working with the SPAN (Stop Patent Abuse Now) Coalition, particularly focusing on the issue of demand letters. Through this industry coalition, we are seeking to find consensus in this area to assure that legitimate patent holders’ rights are protected, while developing means to combat patent trolls. Also, the ANA and the American Association of Advertising Agencies (4A’s) are working together on a program that gives our members the opportunity to confidentially come to us if they are facing problems from a patent troll. The Patent Assertion Information Aggregation and Dissemination Program (PAID) aggregates and combines the information from members and relevant marketing-related patent information. This information is then disseminated to members of the marketing community via periodic Patent Assertion Landscape Summary (PALS) updates. These updates provide association members with a strategic advantage in monitoring and assessing patent assertion demands by Patent Assertion Entities (PAEs). ANA and 4A’s members can monitor PALS information updates by going to the 4A's Patent Forum Website.

We also have launched a series of meetings to be held all across the country to provide a forum for our members and hear their stories on patent issues. Through these efforts, the ANA will continue to work toward a consensus that can provide clarity for lawmakers in the policymaking process.

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