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Washington
CUNA Hails Waiver Provision In New Patent Reform Bill
WASHINGTON (10/14/13)--A House bill intended to fight predatory "patent trolls," introduced Wednesday by House Judiciary Committee Chair Bob Goodlatte (R-Va.), includes a waiver provision strongly advocated by the Credit Union National Association.

"We appreciate that Rep. Goodlatte recognized the importance of including a discretionary fee waiver for covered business method patent review proceedings in his bill to help entities wishing to defeat patent trolls. CUNA strongly advocated for the inclusion of this provision. This bill is a first step in the direction of defeating patent trolls, and CUNA is working to ensure that credit unions have a voice at the table as the legislation moves forward," said CUNA President/CEO Bill Cheney.

The bill is intended to increase the transparency of patent ownership and, by doing so, help combat a growing practice by some patent holders that are misusing patents by suing unsuspecting consumers alleging infringements and extorting settlements.

Specifically, an organization will become the target of a demand letter claiming it has infringed a patent. The patent-holder "troll" will offer an opportunity to settle the matter but threatens litigation if the party does not agree to pay a settlement.

The problem revolves holders of questionable patents who purchased the patents solely for the purpose of collecting settlements from entities that do not want a legal fight. Under current law, financial institutions receiving such a threatening letter can seek a review from the U.S. Patent Office that could invalidate the questionable patent.

However, that process carries a hefty price tag starting at around $35,000--too steep for many small financial institutions, like credit unions, to bear. The Goodlatte bill includes a fee-waiver provision that was strongly supported by CUNA. If the bill is passed, that provision would give the Patent Office power to waive the fee on a discretionary basis--broadening the opportunity for smaller entities to protest.

CUNA has expressed deep concerns about the "patent troll" issue because credit unions increasingly have become a target of the abusive practices.

In a joint letter with 42 other trade associations to the U.S. Congress earlier this year (see resource link below), CUNA noted disturbing statistics:
  • Since 2005, the number of defendants sued by patent trolls has quadrupled;
  • Last year, patent trolls sued more than 7,000 defendants and sent thousands more threat letters;
  • The activity cost the U.S. economy $80 billion in 2011, and productive companies made $29 billion in direct payouts; and
  • Trolls no longer sue only large tech corporations. Small and medium-sized businesses of all types, including start-ups, are now the most frequent targets.
Goodlatte's bill joins a number of other patent reform bills in both the House and Senate.
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