October 28, 2013
The Honorable Bob Goodlatte
Chairman
Committee on the Judiciary
U.S. House of Representatives
Washington, D.C. 20515
The Honorable John Conyers
Ranking Member
Committee on the Judiciary
U.S. House of Representatives
Washington, D.C. 20515
Re: Tomorrow’s Hearing on H.R. 3309: Improving the Patent System to Promote
American Innovation and Competitiveness
Dear Chairman Goodlatte and Ranking Member Conyers:
On behalf of the National Association of Federal Credit Unions (NAFCU), the only national trade association that exclusively represents the interests of our nation’s federal credit unions, I write in conjunction with tomorrow’s hearing entitled, H.R. 3309: Improving the Patent System to Promote American Innovation and Competitiveness. We appreciate the committee’s attention to our nation’s patent system, and support several reforms found in the bipartisan Innovation Act (H.R. 3309).
The Innovation Act (H.R. 3309) successfully builds upon the Leahy-Smith America Invents Act[P.L.112-29] to ensure a more efficient patent system, including NAFCU supported language that would help protect credit unions from baseless litigation involving questionable business method patents. We urge the Committee to keep such provisions (including enhanced pleading standards and limits on discovery) intact moving forward. It would provide important relief to credit unions by making it faster and more cost effective to prove that a patent is of poor quality in instances where it leads to frivolous infringement litigation.
A growing number of credit unions are reporting receipt of demand letters from law firms representing “patent trollers” claiming patent infringement with an option to settle or face litigation. The Transitional Program for the Review of Covered Business Method Patents (CBM program) is an important tool for credit unions in seeking fairness in such situations and should be expanded to include the pre-litigation process. Unfortunately, the current process is cost prohibitive, particularly for smaller credit unions. In addition to provisions discouraging such a practice to begin with, theInnovation Act (H.R. 3309) includes a fee-waiver provision that would give the Patent Office discretion to waive such a fee, increasing the opportunity for small institutions to protect themselves from this organized racket.
Lastly, we appreciate the legislation’s attention to the CBM program. In addition to giving the U.S. Patent Office fee waiver authority described above, the Innovation Act (H.R. 3309) removes the sunset provision in current law that would lead to the end of the CBM program. While NAFCU supports this effort, we would note that this section also limits the scope of patents that can be reviewed to those first to invent patents issued before 2011. Given how problematic this issue has been for not-for-profit credit unions, NAFCU believes that arbitrarily limiting the program could lead to additional and unnecessary burden on our members. We are hopeful that this issue can be addressed moving forward.
On behalf of our nation’s credit unions and their 96 million member owners, we thank you for holding this important hearing. The Innovation Act (H.R. 3309) undoubtedly makes the patent review process better for credit unions and we look forward to working with the committee as the legislative process moves forward. If my staff or I can be of assistance to you, or if you have any questions regarding this issue, please feel free to contact myself, or NAFCU’s Director of Legislative Affairs, Jillian Pevo, at (703) 842-2836.
Sincerely,
Brad Thaler
Vice President of Legislative Affairs
cc: Members of the House Committee on the Judiciary