NAFCU letter in advance of patent hearing tomorrow

April 15, 2015

The Honorable Michael C. Burgess, MD
Subcommittee on Commerce, Manufacturing and Trade
U. S. House of Representatives
Washington, DC 20515

The Honorable Jan Schakowsky
Ranking Member
Subcommittee on Commerce, Manufacturing and Trade
U. S. House of Representatives
Washington, DC 20515

RE: Tomorrow’s Hearing, the Targeting Rogue and Opaque Letter Act (TROL Act)

Dear Chairman Burgess and Ranking Member Schakowsky:

On behalf of the National Association of Federal Credit Unions (NAFCU), the only national trade association that exclusively represents the interests of federal credit unions, I write in conjunction with tomorrow’s hearing entitled, The Targeting Rogue and Opaque Letter Act (TROL Act) and to thank you for your leadership in addressing patent demand letters.

A growing number of credit unions are reporting receipt of demand letters from law firms representing patent assertion entities, 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.

The legislation you are working on would clarify the Federal Trade Commission (FTC)’s authority to fight against deceptive practices, while not affecting legitimate patent holders’ rights to send demand letters or otherwise assert their patent rights. Enforcement by the FTC and state Attorneys General would remove some of the financial incentive to send vague and abusive demand letters by patents trolls to elicit quick settlements. Furthermore, additional transparency will assist businesses in understanding the patent claims being asserted so they are better prepared to defend themselves from frivolous claims.

While the legislation is a great first step in addressing this issue, we believe the legislation can and should be improved as it moves through the process. For example, removing the bad faith requirement or expanding the definition, would ensure the protections in the bill will cover small credit unions. Additionally, while the legislation will lead to a decrease in bad faith demand letters from patent trolls, this legislation should not preclude the states from taking action to further improve policies to address abusive demand letter practices or limit their ability to enforce those policies.

Again, thank you for your leadership and taking a good first step in address this issue. 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 Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade

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