From the Alliance

Jul. 10, 2014

Innovation Alliance Letter to House Energy & Commerce Subcommittee on Commerce, Manufacturing, and Trade Leaders Expressing Support for the Targeting Rogue and Opaque Letters Act of 2014

July 10, 2014

The Honorable Lee Terry
Energy & Commerce Subcommittee on Commerce, Manufacturing, and Trade
United States House of Representatives
Washington, D.C. 20510

The Honorable Jan Schakowsky
Ranking Member
Energy & Commerce Subcommittee on Commerce, Manufacturing, and Trade
United States House of Representatives
Washington, D.C. 20510

Dear Chairman Terry and Ranking Member Schakowsky:

On behalf of the Innovation Alliance, I write in support of the Targeting Rogue and Opaque Letters Act of 2014. With modest improvements, we believe Congress should pass this important legislation. The Innovation Alliance is a coalition of research and development-focused companies that believe in the critical importance of maintaining a strong patent system that supports job creation and innovative enterprises of all sizes. We seek to enhance America’s innovation environment by improving the quality of patents and protecting the integrity of the U.S. patent system, which is an essential part of America’s economic success, contributing to economic growth, higher income, and more jobs.

Through the mass mailing of bad faith demand letters, some bad actors have abused an otherwise legitimate patent enforcement practice for the purpose of extracting payment from small “mom and pop” businesses and other groups of people generally unfamiliar with the patent system. We thank you for the hard work you and your staff have undertaken to craft a bill that sensibly targets abusive demand letter practices while respecting legitimate patent-related communications, which are integral to the functioning of the patent system and often allow for the resolution of patent disputes without the need for costly litigation.

Several features of the proposed TROL Act are critical to maintaining the proper balance achieved by this bill. First, the required disclosures are reasonable in scope. Requiring highly detailed disclosures in a demand letter (for example, a list of all asserted claims and accused products or a detailed description of why each claim is infringed) would impose an unfair burden on patent owners that could mandate inordinately lengthy communications and require the disclosure of confidential information. For some patent holders, particularly individual inventors, small businesses, start-ups and those lacking extensive financial resources, the burden imposed by overly detailed disclosures would impair their ability to enforce their intellectual property rights.

Second, limiting the bill to cover only statements or representations made in bad faith (and including an affirmative defense for mistakes made for good faith) critically brings the legislation in line with the Constitution. The First Amendment affords broad protection for activities relating to the enforcement and communication of patent rights, and courts have repeatedly held that a patent holder should not be penalized for communicating its patent rights or an allegation of infringement in good faith.

Finally, the preemption provision of the TROL Act provides the clarity and uniformity necessary for legitimate patent holders to exercise their patent rights in good faith. Numerous states have recently passed overly broad legislation relating to patent demand letters that contain divergent requirements and prohibitions. Ensuring compliance with federal legislation and a patchwork of state laws will make enforcement of patent rights extremely burdensome and, for some patent holders, prohibitively expensive, which could chill the sending of legitimate patent-related communications made in good faith. The federal government is best positioned to address the problem by setting a fair national standard that will be applied uniformly.

We applaud you and your staff for creating a balanced bill that combats abusive demand letters and look forward to continuing to work with you in support of this legislation.

Brian Pomper
Executive Director
Innovation Alliance