Patent Demand Letter Bill Moves to Full Committee Over Democratic Objections
A bill to curb misleading patent demand letters will move to the full House Commerce Committee despite Democratic opposition in a subcommittee markup Thursday. The House Commerce, Manufacturing and Trade Subcommittee voted 13-6 to approve the Targeting Rogue and Opaque Letters (TROL) Act (HR-4450), which is intended to stop “patent trolls” -- entities that request compensation for patent infringement without producing products -- from sending patent demand letters written in “bad faith.” Two Democrats joined with the Republicans voting in favor of the bill.
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Industry-backed, pro-patent revamp groups have mostly supported the bill. But Democrats, the FTC and state attorneys general (AGs) have expressed concerns about the bill’s vague language, enforceability and pre-emption of state patent laws (WID July 9 p13; July 10 p8). The same pattern held Thursday, with groups like the Coalition for 21st Century Patent Reform (21C) and the Innovation Alliance reiterating their support and Democrats piling on against the measure during the markup. The Computer & Communications Industry Association (CCIA) did break from other industry groups in opposing the bill.
The main sticking point Thursday was the term “bad faith.” Rep. Henry Waxman, D-Calif., said the FTC “has stated very clearly that the bad faith element” makes the bill “almost unenforceable.” For the FTC to prove a demand letter was written in bad faith, it would have to show not just that the letter was deceptive, but that the entity intended the deception, which is very hard to prove in court, said Rep. Peter Welch, D-Vt. The FTC declined to comment.
Even some in support of the bill said the term needs clarifying. After the markup, 21C said more explicit language would be needed “to make it more effective in targeting bad behavior while safeguarding legitimate patent licensing and enforcement communications.” Despite this flaw, “the bill does address the most pressing problems by establishing exclusive standards on a nationwide basis to apply in all 50 states,” said 21C.
Other Democrats raised concerns over the bill’s limit to civil penalties that states can collect for deceptive demand letters and its pre-emption of already existing, more stringent patent troll state laws. Welch’s Vermont is one example, he said. The Vermont Attorney General’s Office told Welch the bill “would actually take away some tools Vermont has developed,” he said. Despite a minor amendment to give state attorneys general more enforcement power, Rep. Jerry McNerney, D-Calif., said, “I don’t think we're ready to put this bill forward,” citing further changes suggested by the Vermont and Oregon AG offices.
"It has been suggested that any concerns raised were either last minute or surprising,” said Subcommittee Ranking Member Jan Schakowsky, D-Ill. Not true, she said. Stakeholders expressed their feelings as soon as they “saw the language.” Welch also worried a piecemeal patent bill would discourage the Senate from resuming its dormant discussions on a broader patent revamp bill, which already made it through the House (WID May 23 p4). “The passage of this is going to become an excuse for the Senate not to act on what is a comprehensive bill,” Welch said.
CCIA came out against the bill after the markup. CCIA President Ed Black said the measure “would actually empower trolls and insulate abusive conduct. It’s “well-intentioned, but dangerous,” added CCIA Patent Counsel Matt Levy, pointing to 15 enacted and 12 pending state laws the bill would pre-empt. “Tying the hands of state attorneys generals trying to protect their citizens is not an effective way to deal with patent trolls,” he said.