WASHINGTON (Legal Newsline) - A U.S. House subcommittee has advanced a piece of patent reform legislation that would rein in abusive demand letters.
On Tuesday, the Commerce, Manufacturing and Trade Subcommittee of the U.S. House Energy and Commerce Committee voted, 10-7, to move forward with the Targeting Rogue and Opaque Letters Act of 2015, also referred to as the TROL Act.
The proposed legislation offers what some call a “balanced solution” to the demand letter problem -- the crux of the current patent reform debate.
Such letters are often sent by so-called patent “trolls” in an attempt to enforce or assert rights in connection with a patent or a pending patent.
Patent trolls, or “bad actors,” are those patent assertion entities or non-practicing entities that purchase groups of patents without an intent to market or develop a product and then target other businesses with lawsuits.
The TROL Act aims to protect businesses while preserving the ability of patent holders to legitimately protect their intellectual property by increasing transparency and accountability in demand letters. It also would give the Federal Trade Commission the authority to levy fines on fraudulent practices.
The CMT subcommittee is working off a draft of the TROL Act that was advanced by the subcommittee last Congress, and is seeking to improve the bill in an effort to achieve the “greatest protections” without harming innovation or punishing those patent holders acting in good faith.
The subcommittee also voted Tuesday to accept an amendment to mirror the language in the Fair Debt Collection Practices Act for bona fide mistakes, as was suggested by a witness at a hearing held last week.
Chairman Michael Burgess, R-Texas, said the subcommittee will continue to work to strengthen the legislation and urged all stakeholders to come to the table.
“There is no doubt that abusive patent demand letters can wreak havoc on smaller businesses and drive up costs for consumers,” he said. “I hope more stakeholders will work with us within the confines of what we can do constitutionally to provide additional avenues of enforcement.
“Our door remains open and we will continue to move forward. I hope that we can move forward together as opposed to splintering off and dividing at a crucial time.”
But there already appears to be some division over the bill.
The Coalition for 21st Century Patent Reform, also known as 21C, and the Innovation Alliance say they strongly support the legislation, calling it a “balanced solution” to stop bad faith demand letters.
“21C strongly supports the TROL Act as a fair and effective solution to put a stop to bad faith demand letters across the nation,” said Kevin Rhodes, chairman of 21C and chief intellectual property counsel of the 3M Company. “As the bill moves through the full committee, we urge lawmakers to resist amendments which would upset the carefully crafted balance and compromise it reflects.
“The TROL Act represents a targeted and balanced approach to solving this problem that reflects substantial input and negotiations among stakeholders representing multiple industries and business models.”
The coalition has more than 40 members from 18 diverse industry sectors and includes many of the nation’s leading manufacturers and researchers. The coalition’s steering committee includes 3M, Bristol-Myers Squibb, Caterpillar, ExxonMobil, General Electric, Procter & Gamble, Johnson & Johnson and Eli Lilly.
Innovation Alliance is a group made up of research and development-focused companies.
Meanwhile, United for Patent Reform -- whose members include Facebook, Amazon, Google, Cisco, HTC and Vizio, among others -- said it was disappointed with the subcommittee’s markup of the bill.
“Unfortunately the discussion draft of the Targeting Rogue and Opaque Letters Act (‘TROL Act’) falls short of addressing the urgent need for strengthened enforcement of demand letter abuse,” the coalition wrote in a letter to Burgess and other subcommittee members Tuesday.
“The drain on commerce and innovation that vague, misleading or deceptive letters have on businesses across many sectors of the economy is well understood, and we have encouraged the subcommittee to make changes to the draft legislation that would help alleviate the problem.
“Regrettably, none of the changes many of us sought to the 2014 draft have been adopted.”
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.