NAFCU letter in advance of tomorrow’s markup of “PATENT” Act

The Honorable Chuck Grassley
Committee on the Judiciary
United States Senate
Washington, D.C. 20510

The Honorable Patrick Leahy
Ranking Member
Committee on the Judiciary
United States Senate
Washington, D.C. 20510

Re: Tomorrow’s Markup of the Protecting American Talent and Entrepreneurship Act (S. 1137)

Dear Chairman Grassley and Ranking Member Leahy:

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 the PATENT Act (S.1137). On behalf of NAFCU member credit unions and the 100 million credit union members across the country, we appreciate the committee’s efforts to seek a legislative solution to the problems plaguing our nation’s patent system.

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.

Abuses of the patent system by patent trolls through vaguely worded demand letters are a serious problem. NAFCU believes a legislative solution is necessary to address this issue and commend the bill’s sponsors for introducing S. 1137. We believe that this bill is an important first step that can help curb abusive tactics of PAEs who use low quality patents to target businesses of all shapes and sizes. However, we believe further work must be done to enhance the language to curb deceptive demand letters, as well as work 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 for your consideration and 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.


Brad Thaler
Vice President of Legislative Affairs

cc: Members of the Senate Committee on the Judiciary

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