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Polis, Marino, Deutch Reintroduce Bipartisan Legislation to Stop Abusive Demand Letters

Representatives Look to Pass Demand Letter Transparency Act as Component of Comprehensive Patent Reform

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Washington, April 21, 2015 | comments

Representatives Jared Polis (D-CO), Tom Marino (R-PA), and Ted Deutch (D-FL) today re-introduced the bipartisan Demand Letter Transparency Act to tackle the growing problem of patent trolls. Increasingly, businesses of every size are finding themselves on the receiving end of patent infringement demand letters. These letters, which seemingly come out of nowhere, often make allegations that the use of everyday technology, such as wireless email, digital video streaming, and the interactive web, is in violation of a patent holders’ rights.

Rather than running the risk of complicated, time-consuming, and expensive litigation in federal court, many of these businesses simply choose to settle these claims, wasting valuable resources.

“We must put an end to the deceptive and unfair practices of patent trolls,” Polis said. “Making demand letters more transparent and more detailed, along with stricter enforcement and oversight, is a critical piece of a comprehensive patent reform strategy to eliminate the harmful impact of these modern-day scam artists.”

“For too long bad actors have been abusing patents as a means of extortion from businesses of all sizes, including the mom and pop small businesses in my district,” Marino said. “The entire scheme of patent litigation abuse begins with demand letters that often-times make vague claims of infringement, and have threatening language that the recipient can either ‘pay up now, or face a lengthy and expensive court battle.’ It’s time we put an end to these unfair, deceptive practices and demand heightened transparency around demand letters.”

“Current law is letting patent trolls rely on vague, misleading, and intimidating demand letters to threaten small businesses, entrepreneurs, and even end-users of technology with expensive litigation,” Deutch said. “Those who receive these demand letters are then left to decide whether or not to go to court without knowing any details about the patent in question or whose rights are supposedly being infringed. By tracking demand letters as they are sent and requiring them to include more substance, the Demand Letter Transparency Act represents a bipartisan, good-government approach to reigning in the most abusive tactics of patent trolls.”

The Demand Letter Transparency Act aims to assist small companies and end users who lack the money, time, and resources to fight demand letters they receive from patent assertion entities (PAEs) by putting additional information about claims at their fingertips, enabling them to determine whether to ignore, settle, or defend against assertions made by a PAE.

Specifically, the bill would:

· Increase disclosure requirements of PAEs by requiring any entity, other than an original inventor or university, that sends a specified number of demand letters relating to a patent, to submit to the Patent and Trademark Office (PTO) certain information relating to the patent and to file an exemplary copy of such demand letter with the PTO.

· Create a demand letter database at the PTO, in consultation with the Attorney General, that would be a publically accessible and searchable.

· Increase demand letter requirements for any entity sending a demand letter to help those receiving the letter better identify the patents and claims in question. These requirements include identifying and explaining in a more thorough way each patent allegedly infringed, each claim of infringement, and the instrument accused of infringement. In addition, the letter must identify any legal case or post-grant administrative action relating to any of the patents and provide specific information relating to the ownership of any patent allegedly being infringed upon. Finally, the legislation requires entities sending a demand letter to include a statement that the recipient is not required to respond to the letter by law and to provide recipients with information regarding accessing the demand letter database established under the bill.

What others are saying:

DISH: “DISH applauds Representative Polis, along with Representatives Marino and Deutch, for re-introducing the Demand Letter Transparency Act, which focuses on the issue of abusive demand letters.  The bi-partisan legislation, if passed, will help spur innovation and address the growing problem of patent trolls," said Jeffrey Blum, Senior Vice-President and Deputy General Counsel for DISH.”

Engine: “Engine applauds Rep. Jared Polis, Tom Marino, and Ted Deutch’s reintroduction of the Demand Letter Transparency Act. This bill will bring much needed transparency to ambiguous demand letters that are used as a tool for extortion, often targeting this country’s small businesses and startups. A functioning patent system requires robust public notice; this bill will ensure such notice by giving the targets of patent trolls the information they need when facing the very real and very serious threat of spurious patent litigation.”

The Electronic Frontier Foundation: “The Demand Letter Transparency Act shines a much needed light on abusive patent demand letters. The bill takes necessary action to stop bad actors from shaking down small businesses and end users with vague threats. While comprehensive reform is necessary to fix today's patent system, this legislation is a meaningful step in the right direction.”

The Demand Letter Transparency Act is also supported by the National Association of Realtors, Public Knowledge and the Application Developers Alliance.
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