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CUNA joint testimony seeks patent rule tweaks
WASHINGTON (5/16/12)--The Credit Union National Association, the Financial Services Roundtable, and other financial services groups are largely supportive of the U.S. Patent Office's proposed patent law changes, but the patent proposal could also use some additional tweaks, Eliot D. Williams of Baker Botts L.L.P., will tell members of the U.S. Congress today.

Williams is scheduled to testify at a House Judiciary Committee hearing on implementation of the America Invents Act. U.S. Patent and Trademark Office Director David Kappos, Eli Lilly and Company General Counsel Robert Armitage, General Electric Chief Intellectual Property Counsel Carl Horton, 3M Chief Intellectual Property Counsel Kevin Rhodes, University of Michigan Associate General Counsel Richard Brandon, and Business Software Alliance Director of Government Relations Timothy Molino are also slated to testify.

The America Invents aims to protect businesses, including credit unions, from outside claims on some of their specific customer service, payment and marketing practices. It was signed into law by last September.

Outside patent claims, which are often brought by non-practicing entities, can become expensive for credit unions and others if they are end up in court.

In his testimony, Williams is expected to address section 18 of the new law, which creates a transitional program for review of business method patents.

"The importance of the transitional review program cannot be overstated," as the review program "offers a less-costly and more efficient alternative to litigation, so that businesses acting in good faith do not have to spend the millions of dollars it costs to litigate a business method patent of questionable validity," Williams' prepared testimony says. The review process allows the patentholder and patent challenger to make their own arguments, it adds.

However, Williams will suggest fees associated with the business method review program could be revised to ensure the program is "broadly accessible" to both large and small entities against whom covered business method patents are asserted. Accordingly, the fee should be reduced in instances where the petition is filed by a small (or micro) entity.

The current fee structure "may enable owners of business method patents to extract settlements from small entities using a settlement value based on avoiding the cost of filing a business method review which, in the case of patents with numerous claims, may exceed $100,000 -- even if the review is not ultimately granted," Williams will warn.

Williams will recommend that a staged fee structure could be used, imposing an initial fee due at the filing of a petition for business method review, and a subsequent fee due if the review is instituted.

Williams' testimonyt also represents the American Bankers Association (ABA), the American Insurance Association (AIA), the Independent Community Bankers of America (ICBA), NACHA – The Electronic Payments Association, and the National Association of Federal Credit Unions are also noted in his testimony.

Williams also suggested some technical changes and changes to definitions in the rule be added.

For more on the hearing, use the resource link.
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