House Commerce Marking Up Rogue Patent Letters Bill

Would define some PAE communications as unfair and deceptive
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The House Commerce, Manufacturing and Trade Subcommittee has scheduled a July 10 markup for a bill that would crack down on "illegitimate" patent demand letters. Those are ones that show a pattern of threatening lawsuits over vague or unsubstantiated patent claims.

The bill, the Targeting Rogue and Opaque Letters Act (H.R. 4450), is billed as protecting legitimate patent holders but protecting businesses from "abusive" patent assertion entities (sometimes called patent "trolls"). The bill would try to discourage such deceptive communications to consumers, end users or "systems integrators" by spelling out the ways in which those would be illegally unfair and deceptive and thus subject to Federal Trade Commission action.

Subcommittee chairman Lee Terry (pictured) (R-Neb.) introduced a discussion draft of the bill in May.

Demand letters warn people of infringing conduct and often try to solicit a settlement under the threat of legal action. Some are legitimate warnings, but others are attempts to extort money on the basis of vague and broad claims that, as one Federal Trade Commission official put it at a May hearing on the subject, "may be sent very broadly and without prior investigation, may assert vague claims of infringement, and may be designed to obtain payments that are based more on the costs of defending litigation than on the merit of the patent claims."

A copy of the latest draft of the bill is available here.

The House has already passed a "patent troll" bill, the Innovation Act of 2013 (H.R. 3309), strongly backed by the National Cable & Telecommunications Association. But that was targeted at the lawsuit process rather than the letters that precede them. It would require lawsuit plaintiffs to specify which patents are at issue and what products they allegedly infringe. It would also allow a court to require the loser in a patent case to pay the winner's costs if the case was not reasonably justified. "We commend the members of both parties who voted for this pro-jobs, pro-economy bill."

But a Senate version of that bill was pulled from the calendar by Senate Judiciary Committee chairman Patrick Leahy (D-Vt.), who said there was no agreement on what should be in that bill.

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