The full House Energy & Commerce Committee Wednesday will mark up the Targeting Rogue and Opaque Letters (TROL) Act, which would define what constitutes a false and deceptive patent assertion entity (PAE) letter subject to FTC enforcement under its Sec. 5 authority.
The bill passed out of a politically and ideologically divided Commerce, Manufacturing and Trade subcommittee last week, and divisions remain, if the opening statements for the markup, which were made Tuesday, were any indication.
Rep. Jan Schakowsky (D-Ill.) ranking member of the subcommittee, said last week that that she had issues with the base bill, and reiterated those in her statement. Those include that the bill preempts 21 state laws on patent assertion entities, that it caps penalties, and that it requires the Federal Trade Commission to prove bad faith by the senders of patent assertions, which she said makes it almost unenforceable.
Rep. Joe Barton (R-Tex.), said he could not support the bill as currently constituted, saying he had been on the phone with constituents and trade groups representing home builders, retailers and others who opposed the bill.
The bill establishes that "it is an unfair or deceptive act or practice under the FTC Act to engage in a pattern or practice of sending demand letters...in bad faith." It also establishes an "affirmative defense" of letters if statements, representations or omissions were not made in bad faith "if the sender can demonstrate that such statements, representations, or omissions were mistakes, including by evidence that the sender does not send letters in violation of this Act in the usual course of business."
The bill preempts all state laws, rules and regs pertaining specifically to demand letters, but would leave laws of general applicability, like consumer protection laws.
The FTC would get to seek civil penalties for unfair or false demand letters, but would not get new rulemaking authority.
State attorneys general could also enforce the law — as well as the general consumer laws — and seek civil penalties, but not if the FTC had a pending action in the same case.
Opponents of the bill cite several factors. They argue that the "pattern or practice" and "bad faith" caveats and "affirmative defense" carveout provide loopholes for bad actors. They argue preemption weakens enforcement and would invalidate 20 state laws, some of which are stronger than the federal standard being proposed.