WASHINGTON, DC (November 6, 2013) --
The Honorable Claire McCaskill
Chairman
Committee on Commerce, Science, and Transportation
Subcommittee on Consumer Protection, Product Safety, and Insurance
United States Senate
Washington, D.C. 20510
The Honorable Dean Heller
Ranking Member
Committee on Commerce, Science, and Transportation
Subcommittee on Consumer Protection, Product Safety, and Insurance
United States Senate
Washington, D.C. 20510
Re: Tomorrow’s Hearing Examining Deceptive Practices by “Patent Trolls”
Dear Chairman McCaskill and Ranking Member Heller:
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, Demand Letters and Consumer Protection: Examining Deceptive Practices by Patent Assertion Entities. We appreciate the Subcommittee’s attention to this important matter, and urge you to address the patent system weaknesses that give “patent trolls” the incentive to target credit unions and other small businesses.
A growing number of credit unions are reporting receipt of demand letters from law firms representing patent assertion entities 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. In that regard, it would be helpful if Congress could clarify that a demand letter, or other pre-litigation communication suggesting that infringement may have occurred, shall constitute an accusation of infringement giving rise to a real and substantial controversy for purposes of a CBM program review.
Unfortunately, the current process is cost prohibitive, particularly for smaller credit unions. NAFCU recommends a fee-waiver provision that would give the Patent Office discretion to waive such a fee, thus increasing the opportunity for small institutions to protect themselves from this organized racket.
NAFCU would like to see a more efficient patent system that would protect credit unions from baseless litigation involving questionable business method patents. We urge the Subcommittee to consider enhancing pleading standards and limits on discovery that would make it faster and more cost effective to prove that a patent is of poor quality in instances where it leads to frivolous infringement litigation.
Additionally, NAFCU recommends the removal of the sunset provision in current law. It is important to note that the CBM program was created to ensure that patents that could not otherwise be reviewed against the best prior art could be reviewed if the PTO determines that they are more likely than not invalid. This is an exceptionally high bar, which protects patent holders from abuse and ensures that only the lowest quality patents go through a CBM review. The CBM program is working and we believe that the sunset should be removed without qualification.
On behalf of our nation’s credit unions and their 96 million member owners, we thank you for holding this important hearing. We look forward to working with Congress 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 Associate Director of Legislative Affairs, Chad Adams, at (703) 842-2265.
Sincerely,
Brad Thaler
Vice President of Legislative Affairs
cc: Members of the Subcommittee on Consumer Protection, Product Safety, and Insurance