WASHINGTON — The House of Representatives on Thursday passed a bill aimed at curbing abusive practices by "patent trolls" who file frivolous lawsuits - by a 325-to-91 margin with bipartisan support.
Also known as "The Innovation Act," HR 3309 is backed by credit unions and other financial institutions seeking relief from serial plaintiffs who file numerous suits alleging patent infringement - typically hoping to force defendants into signing licensing agreements rather than take on the expense and risk of litigation.
Bill Cheney, president and CEO of CUNA, immediately issued a statement welcoming the passage of the bill.
"We appreciate the strong bipartisan vote from the House of Representatives today on the Innovation Act," said Cheney. "This is welcome news for credit unions who have become a target of patent trolls, particularly with regard to ATM and check processing technology."
According to Cheney, the legislation included several provisions important to credit unions, including language that gives the Patent and Trademark Office Director discretion to waive filing fees for Section 18 appeals and language that requires patent trolls to identify their parent entity when making a patent infringement claim.
"The legislation is a strong step in the right direction, and we look forward to working with the Senate as they consider this issue," he added.
'Strange Bedfellows'
From the "politics-makes-for-strange-bedfellows" department, prior to the House passing HR3309, CUNA joined with the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) in sending a rare joint letter to House Speaker John Boehner and Minority Leader Nancy Pelosi.
In the letter, the three trade associations urged passage of the bill and noted the legislation takes a positive step toward addressing the "exponentially growing" threat of "Patent Assertion Entities (PAEs)," commonly referred to as "patent trolls," that assert patents of "dubious" quality against legitimate businesses, including banks and credit unions.
"We are encouraged by the inclusion of language in H.R. 3309 granting the Director of the Patent and Trademark Office (PTO) discretionary authority to waive the filing fee for the transitional proceeding for the review of Covered Business Method Patents (CBM program) described under section 18(a) of the Leahy-Smith America Invents Act (AIA)," the letter stated. "This provision would be beneficial for smaller financial institutions by helping deter patent trolls from sending abusive and extortive 'demand' letters and ensuring that institutions of all sizes have access to the CBM program."
Looking forward, the three banking trade groups urged Congress to create additional protections for FIs.
"Any final legislation enacted into law must also deal effectively with a pervasive dilemma facing 'end users,' " the letter stated. "This is a paramount concern for financial institutions. Credit unions and banks are in almost all circumstances buyers (end users) of technology and rarely develop it themselves. Simply, they should not be sued for patent infringement for buying something in good faith, off the shelf. While H.R. 3309 is a starting point, more needs to be done to provide a common sense solution to this problem."
