Patent Trolls: A Legislative Update

In 2014 Congress tried to pass a bill targeted at restricting abusive patent litigation by non-practicing entities or “patent trolls”. The bill died in the Senate before a vote, even though it had momentum and the support of President Obama. Fast forward to 2015 and patent reform bills have a pulse again – in the House and Senate.

The House Bill (HR 9 “The Innovation Act”) was introduced in April by Judiciary Committee Chairman Bob Goodlatte and the bill passed the Committee overwhelmingly last week 24-8. The Senate Bill (S1137 “Patent Act”) was introduced in May and also passed the Senate Judiciary Committee last week. Chairman Goodlatte said  “The Innovation Act is supported by a wide range of groups that include stakeholders from all areas of our economy representing businesses of all kinds from every corner of our country including independent inventors and innovators.” The Bill could make its way to the House floor next month and a bill become law by the end of the year.

The House Bill and the Senate Bill have parallel provisions to eliminate abuses of our patent system, discourage frivolous litigation and target specific abusive patent litigation behavior, not specific entities. However, the bills also have areas of difference – 3 that I feel are significant.

Demand Letters

Senate and House provisions deal with the abuse of demand letters – evasive letters sent by patent trolls to alert of an infringement and demand quick settlements without providing details of the actual patent in question. Many are concerned that the House Bill does not do enough to address the serious harm that come from the vague but intimidating demand letters. The Senate bill outlines specifics of what must be included in a demand letter. The SB establishes civil penalties for those who practice sending ambiguous demand letters.

Fee Shifting

This provision is probably the most controversial but shouldn’t be if demand letters are addressed properly. Under this provision, a Patent Troll will have to pay court costs and legal fees if they lose the case. Fee shifting will have a better chance in the House vs. Senate. Opponents are concerned that fee shifting will prevent legitimate suits against patent infringement and will not prevent the targeting by trolls.

Fee Recovery

Again, both bills have this provision and prevent patent trolls from using “masked” shell companies. Both pieces of legislation have processes in place to recover fees where the patent troll is hiding behind a shell company – the biggest difference is timing. The Senate Bill wants inability to pay disclosed early in the litigation process  and the House bill does not require disclosure until the end of the trial. 

As with any piece of legislation, there will be mutual concessions and hopefully after some “agreeing to disagree” Congress can get one of the bills into law this year. “Fee Shifting” is most controversial but also makes the most sense to scratch. Fee shifting will not deter patent trolls. In order for fee shifting to happen there must be a prevailing party and that requires defendants (a lot of times small startups) to fight the case to the end and win against experienced trolls with legal advisers. The focus needs to be on Demand Letters -- provisions regarding Demand Letters present a real opportunity to identify and penalize NPE’s in the initial abusive patent litigation process.  

GOTV: An Acronym We Take For Granted

I never expected my first blog post with the Chamber to involve comparing Mexico elections and Roanoke elections. However, being in the middle of two timely Election Days (one yesterday, one tomorrow) I felt compelled.

Yesterday, amid intense violence and protests at the polls, Mexico held their 2015 mid-term elections and for the first time in history there were Independent candidates allowed on the ballot -- one of those Independent candidates (Jaime Rodriguez) is expected to win a major upset victory. The changes to their voting procedures stem from a 2014 constitutional reform that many hoped would create avenues to plurality and true democracy. As Mexico’s government continues to be plagued by corruption and scandal, leadership in Mexico City saw this reform as an opportunity to enhance transparency and opportunity in the voting process. However, as opportunity for voters and candidates grew, so did the grip violence has on Mexico.

In the recent weeks leading up to yesterday’s election, Mexico has been witness to:

• 8 candidates assassinated

• Over 30 kidnapped citizens 

• 1 campaign aide killed

• Over 20 murders associated with the elections

But candidates did not back down out of fear and voters swarmed the polls. 


While staggering, these numbers are not novel to Mexican politics and it's important to note that the U.S. is not far removed from our own bout with violence in the voting process. Just a few months ago we honored 50 years since the sacrifices by “Bloody Sunday” protesters in Alabama.  The resiliency of civil rights leaders to march in the face of violence and prejudice did send a message to our country and the ripple effect lead to the landmark Voting Rights Act – an act some labeled as the crown jewel of Civil Rights legislation. 


When you consider the sacrifices made for our "crown jewel" legislation and sacrifices candidates and voters made in Mexico yesterday--it's disappointing to think we take voting for granted in the U.S.  Projections for tomorrow's Primary in Virginia's 17th House District:

• We can only expect about 8% (high projection) in tomorrow's primary

• That means only 4400 of 55,000 voters in VA17 will vote--again a high projection

• In the last Roanoke County Primary only 656 of 67,189 registered voters cast ballots

• Tomorrow's Primary will cost the county around $18,000 to ensure a fluid voting process

• Primary turnout in 2014 was worst since WWII

The numbers above are concerning, especially given the sacrifices made for all citizens of the U.S. to vote. Understandably, voter enthusiasm is down because of the hyperpartisan atmosphere in Washington but it cannot deter us from exercising one of the greatest rights granted to us as U.S. citizens -- too many have fought for that right and too many continue to fight for that right across the globe.
If you live in Virginia's 17th House District and are interested in voting in tomorrow's Primary, I encourage you to do so and tell a friend. Because GOTV (Get Out The Vote) is not an acronym we can take for granted. 

Nobody will ever deprive the American people of the right to vote except the American people themselves and the only way they could do this is by not voting. –Franklin D. Roosevelt

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