February 27, 2014 | By Julie Samuels

Senators Take Aim at Patent Troll Demand Letter Abuses

We've made considerable progress in our fight against patent trolls. The House, you may remember, resoundingly passed the Innovation Act last year. The President has since said he would sign it, and make a strong statement in support of reform in this year's State of the Union address. Now, we await on the Senate to act (speaking of which, have you signed our letter urging such action?).

Even with this progress, however, we've long worried about the demand letter problem. Last year, when we launched our demand letter database Trolling Effects, we wrote:

The letters demanding these payments are often evasive, failing to include details about the patents, who owns those patents, and the products or services that allegedly infringe. They fail to give recipients the information to make rational decisions, such as whether they should pay the troll, ignore the letter, or go to court to fight it. Just hiring a lawyer to ascertain that seemingly simple information can easily cost well into the tens of thousands of dollars.

The letters raise even more fundamental concerns, too. Because they happen before a legal complaint is ever filed, they are not part of the public record. And once a settlement or license is signed, it will likely include a non-disclosure provision, prohibiting the letter's recipient from talking publicly about its contents. This means that the scope of the problem is often underreported, making it harder for policymakers to understand the true scale of the patent troll problem.

Today, we are one step closer to having a real solution to this problem. Senators McCaskill (D-Mo.) and Rockefeller (D-W.V.) introduced the Transparency in Assertion of Patents Act, an important piece of legislation that would really protect consumers and small businesses by curbing the patent demand letter problem.

The bill would:

  • Require that demand letters contain certain basic information, such as a description of the patent at issue, a description of the product or service that allegedly infringes it, the names and contact information for the patent's owners, and disclosures of ongoing reexaminations or litigations involving that patent.
  • Define as an illegal unfair or deceptive practice certain egregious behaviors, such as sending letters threatening litigation without a real intent to file litigation or sending letters that lack a reasonable basis in the law.
  • Explicitly give state attorneys general the power to to target similar bad behavior in their own states.
  • Allow the Federal Trade Commision to enforce these rules by levying penalties of $16,000 per each violation.

Making this bill law would go a long way toward stopping some of the worst demand-letter abuses. We applaud Sens. McCaskill and Rockerfeller and look forward to supporting this piece of legislation as it works its way through the Senate.

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