NAFCU letter in advance of markup of H.R. 9, ‘The Innovation Act’

(June 11, 2015) — 

The Honorable Bob Goodlatte
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 Markup of H.R. 9, “The Innovation Act”

Dear Chairman Goodlatte and Ranking Member Conyers:

On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association exclusively representing the interests of our nation’s federal credit unions, I write today in advance of tomorrow’s markup of H.R. 9, “The Innovation Act.” On behalf of NAFCU member credit unions and the 100 million credit union members across the country, we appreciate the committee’s continued efforts to seek a legislative solution to the issues surrounding our nation’s patent system. Tomorrow’s markup will be an important step, and we look forward to working with the Committee on improving this legislation.

A growing number of credit unions are reporting receipt of demand letters from law firms representing patent assertion entities (PAEs), claiming patent infringement, with the option to settle or face litigation. These deceptive letters are confusing and misleading as they often allege that the use of everyday technology violates the patent holders’ rights. Further, these letters typically state vague or hypothetical theories of infringement, and often overstate or misinterpret the patent in question. Because the cost of litigation is often more expensive than paying a settlement amount, these “patent trolls” use the threat of litigation as leverage to extract payment from the recipient business who settles in lieu of running the risk of a complex and lengthy legal battle.

NAFCU believes a legislative solution is necessary to alter the intimidating business model used by these PAEs and will continue to be supportive of any Congressional effort to curb these practices. As you consider H.R. 9, we urge you to ensure that demand letters include clear and detailed information, such as the owner of the patent, what entities have a financial interest in the patent, what product or service is allegedly being infringed and how such product or service infringes the patent. Without this information, credit unions, especially smaller ones, have no way to effectively evaluate the merits of the demand letter. Additionally, we urge the committee to consider ways to ensure that meaningful opportunities exist for all sectors to challenge low quality patents and have them reviewed by experts at the Patent and Trademark Office for validity.

Thank you, again, for your attention to this matter of great importance to our nation’s credit unions. If my staff or I can be of assistance to you, or if you have any questions regarding the impact of patent trolls on credit unions, please feel free to contact myself, or NAFCU’s Director of Legislative Affairs, Jillian Pevo, at 703-842-2836.


Brad Thaler
Vice President of Legislative Affairs

cc: Members of the House Judiciary Committee

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