Momentum builds to limit patent threats

Patent reform advocates are lining up to support a new House bill that would put restrictions on the "demand letters" companies send threatening patent infringement lawsuits.

A bill “targeting abusive demand letters is urgently needed and will address one of the most pressing problems that currently exists in connection with patent enforcement practices,” the Coalition for 21st Century Patent Reform said. 

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The bill from House Commerce Subcommittee on Trade Chairman Lee Terry (R-Neb.) — introduced as a discussion draft last week and set to be considered by the subcommittee Thursday — is aimed at curbing abusive demand letters. 

The bill would codify the ability of the Federal Trade Commission and state Attorneys General to bring charges against companies that send deceptive letters that include certain misleading information or fail to include other necessary information.

Many in the tech industry have lobbied on Congress to set requirements for these demand letters, saying that "patent trolls" use the letters to extort inventors and impede innovation.

“Patent trolls use deceptive demand letters to extort unjustified payments from companies that cannot afford to fight back in court,” Jon Potter, president of the Application Developers Alliance, said in a statement.

“Simply by requiring that demand letters identify the infringing activity and the patent and claim infringed, the new law should help curb abusive patent troll practices,” he continued.

Potter’s group — which works with Google, Yahoo and more than 30,000 app developers — was a vocal advocate for comprehensive patent reform before Senate Judiciary Chairman Patrick Leahy (D-Vt.) shelved his comprehensive patent reform bill earlier this year.

“Although comprehensive patent reform legislation is still urgently needed, and developers nationwide were disappointed when the Senate postponed consideration of Chairman Leahy’s patent reform legislation, demand letter legislation will give innovators some critical relief,” Potter said.

Demand letter legislation is considered less controversial than broader reform, and groups that often opposed comprehensive reform advocates are also throwing their weight behind Terry’s bill.

The bill “appropriately targets abusive behavior rather than particular types of patent owners, while maintaining the integrity of legitimate patent enforcement practices for all patent holders,” Brian Pomper, executive director of the Innovation Alliance, said in a statement.

Pomper’s group works with intellectual property-reliant companies like Qualcomm and Dolby and often opposed measures that Senate Judiciary Committee members were trying to attach to Leahy’s comprehensive reform bill.

“Patents are essential to incentivizing invention, investment, research and development, and job growth,” Pomper said this week. “As such, any patent legislation should enhance those economic functions.”

The Coalition for 21st Century Patent Reform — which represents patent-reliant pharmaceutical and tech companies including Bristol-Myers Squib, Johnson & Johnson and 3M — also praised the bill’s narrow focus.

They urged lawmakers to vote for the “balanced and effective solution to the problem of abusive demand letters” and said they plan to work with Terry’s staff moving forward to further refine the bill.