SOFTWARE PATENT REFORM UPDATE
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The fight for comprehensive patent reform is heating up in the U.S. Congress and the Apps Alliance continues to fight for legislation that will protect small businesses and innovators.
Over the last several months the Alliance has hosted local events with intentions to increase awareness of the broken patent system and held meetings with members of Congress for small businesses' to share their experiences with patent trolls.
The U.S. Congress is signaling its readiness to address patent trolling. The House introduced the Innovation Act in February and the Senate recently introduced the Protecting American Talent and Entrepreneurship Act (PATENT Act). Between the House and Senate, a half-dozen hearings have been held on the patent litigation landscape. It’s not yet clear what bill – if any – will ultimately get to the President’s desk, but we expect both chambers to swiftly markup their respective bills.
Click a button below to read more information
Apps Alliance Hosts Entrepreneurs to Meet with Members of Congress
The Alliance hosted a Congressional fly-in on Wednesday, April 29. Thirteen entrepreneurs flew in from around the country to meet with legislators and staff, imploring Congress to pass legislation to curb abusive patent trolls. Fly-in participants took part in more than 30 meetings on Capitol Hill, meeting with key aides and legislators in both the Senate and House.
Apps Alliance Member Speaks Out
Patent Reform Panel
The Alliance hosted New York City-based Ordrx's founder and CEO David Bloom. He participated in a patent reform panel featuring an array of stakeholders and capped off his visit meeting with a half-dozen legislative aides in the House and Senate. Our Alliance members have been key in pushing for a fair and strong patent reform law.
“Yesterday my company, OrdrX, shut down. I enjoyed five extraordinary years as an innovator and a job-creator, but during those years I spent as much money defending against patent trolls as I paid myself in salary. OrdrX had early fundraising and business success, but then patent trolls and the patent system put us on a treadmill to nowhere, and we finally collapsed." - David Bloom, Founder and CEO of Ordrx
Update on the PATENT Act
Introduced by: Senators Grassley (R-IA), Leahy (D-VT), Cornyn (R-TX), Schumer (D-NY), Lee (R-UT), Hatch (R-UT) and Klobuchar (D-MN)
What is the PATENT Act?
The PATENT Act stands for "Protecting American Talent and Entrepreneurship." The PATENT Act is a bill introduced by the U.S. Senate that makes necessary and commonsense reforms to stop abusive patent litigation practices and prevent bad actors from further undermining the system that made the United States one of the most dynamic and innovative countries in the world.
The PATENT Act would:
Require patent litigation plaintiffs to provide greater specificity when alleging infringement;
Require plaintiffs to disclose what parties have a financial interest in the case;
Stay end-user cases if the manufacturer of a product are also involved in litigation;
Stay discovery before preliminary motions are resolved;
Force losing parties to pay the legal fees of prevailing parties in some circumstances; and
Require greater specificity and transparency in demand letters, while also clarifying that the Federal Trade Commission (FTC) can levy civil penalties if a person is found to be engaged in a deceptive trade practice.
To read the bill, click here
UPDATE: June 4 Senate Judiciary Committee Pass PATENT Act
On Thursday June 4, the Senate Judiciary Committee passed S. 1137, the “Protecting American Talent and Entrepreneurship (PATENT) Act” with broad bipartisan support. The bill was reported out of committee by a 16-4 vote, with only one amendment. The PATENT Act will next be considered by the entire Senate. A schedule for a floor debate and vote has not been set.
The lone amendment agreed to was offered by Senator Dianne Feinstein (D-CA). Her proposal would prohibit those who send demand letters from including a specific monetary request in their initial communications with alleged infringers. The Apps Alliance is concerned that the progress made on the issue of demand letter transparency in the bill may be weakened by Senator Feinstein’s amendment and will continue to work to strengthen the language in favor of requiring more specificity and detail in demand letters.
The Alliance’s statement on the bill’s passage is available here.
UPDATE: May 7 Hearing on the PATENT ACT
On Thursday May 7, the Senate Judiciary Committee held a legislative hearing on the bill. The witnesses included representatives from Cisco, JC Penney, and Engine testifying in support of the legislation. Bristol Myers-Squibb and 3M also testified and indicated the bill is an improvement from last year’s legislation, but still incomplete because it does not include changes to the post grant review and inter partes review process.
At the hearing, Senator Blumenthal (D-CT) shared Apps Alliance member Michael Skelps’ story and experience with patent trolls. Skelps, President of Capstone Photography, was sued by a patent troll and won the case. Despite his victory, his business suffered.
The Alliance supports the PATENT Act and continues to push for action on the legislation. Prior to the hearing, Skelps and a dozen members participated in the Alliance fly-in and shared their stories with multiple members of Congress and their staff.
Additional background on the PATENT ACT
The Alliance has created documents to help summarize and breakdown the bill:
- Summary - read the PATENT Act summary including key provisions: Download PDF
- Section-by-Section - understand each section of the PATENT Act: Download PDF
Update on the Innovation Act
Reintroduced by: House Judiciary Committee Chairman Bob Goodlatte (R-VA)
NOTE: In the previous Congress, the Innovation Act passed the House 325 to 91, but was not considered on the Senate floor.
What is the the Innovation Act?
The Innovation Act is a comprehensive bill to reform patent litigation however, it does not address demand letters in any meaningful way. The House Judiciary Committee will hold a markup on the bill in the beginning of June.
The Innovation Act would:
Require greater specificity in complaints;
Make those who bring frivolous lawsuits pay the legal fees of the prevailing party;
Protect end users through a customer stay provision; and
Make alternatives to litigation more accessible by correcting errors in the America Invents Act.
To read the bill, click here.
What's the difference between the PATENT Act and the Innovation Act?
The Alliance created a comparison document to help you understand the key differences between the House and Senate bills as introduced.
UPDATE: June 11 - The House Judiciary Committee Passes the Innovation Act (H.R. 9)
On Thursday, June 11, the House Judiciary Committee passed H.R. 9, The Innovation Act with bipartisan support. The bill passed by a 24-8 vote.
The Committee agreed to two amendments supported by the Apps Alliance. The first strengthens the venue provision so that patent trolls cannot drag defendants to a distant court with little or no connection to them. Second, the Alliance supported an amendment that would delay expensive discovery until a motion to dismiss or motion to transfer venue was determined.
While the Innovation Act is a good first step for the patent reform that innovators and small businesses desperately need, there is still work to be done to address the growing problem of abusive patent demand letters and vague lawsuit pleadings.
The Alliance's comment on the bill's passage is available here.
Update on the TROL Act
Introduced by: Chairman of the Commerce, Manufacturing, and Trade Subcommittee, Burgess (R-TX).
What's the TROL Act?
The TROL Act would make sending vague and opaque demand letters an unfair and deceptive act, enforceable by the FTC and preempts existing state laws. 20 states have enacted consumer protection laws to shield state businesses from abusive demand letters, and many of these laws are stronger than the TROL Act. The Alliance seeks strong federal legislation that mirrors the strongest state laws.
The TROL Act would:
- Require that demand letters include the identity of the patent allegedly infringed, owner of the patent, the owner's contact information, and the alleged infringing actions;
- Classify pattern or practice of sending vague demand letters as an unfair and deceptive practice, clarifying the Federal Trade Commission's (FTC) authority to police bad actors;
- Allow senders of demand letters the opportunity to prove they have not acted in bad faith;
- Preempt existing state laws related to demand letter requirements.
To read the bill, click here.
TROL ACT Status
The TROL Act was passed by the House Energy and Commerce Committee on April 29, 2015. It is not known when the bill will be considered on the House floor, but we expect it to move in tandem with the larger Innovation Act.
Update on Demand Letter Transparency Act
Introduced by: Rep. Jared Polis (D-CO), Rep. Tom Marino (R-PA), and Rep. Ted Deutch (D-FL)
What is the Demand Letter Transparency Act?
The Demand Letter Transparency Act is a bill that would increase the disclosure requirements of demand letter senders, create a publicly accessible demand letter database at the Patent and Trademark Office, and require greater specificity in demand letters. The Alliance supports the Demand Letter Transparency Act.
To read the bill, click here.