HOUSE IP SUBCOMMITTEE HOLDS ANOTHER HEARING ON PATENT REFORM
On March 25 the House IP Subcommittee held a hearing titled “Patent Reform: Protecting American Innovators and Job Creators from Abusive Patent Litigation.” Witnesses were MARK GRIFFIN, Overstock.com, Inc.; BRYAN PATE, ElliptiGO,Inc. KATHRYN UNDERWOOD, Ledyard National Bank; and TODD MOORE, TMSoft, LLC.
Griffin said that while Overstock.com defends frivolous suits, many retailers and others who receive frivolous patent demands cannot afford the expense. He called for a multi-faceted approach that would heighten the pleading standard for patent infringement, provide for stays of litigation against a customer while litigation proceeds against a manufacturer, limit the scope of discovery prior to claim construction and impose cost-shifting for requests outside that scope, and a stronger fee shifting statute.
Pate said several aspects of the Innovation Act could create new ways for infringers to abuse the system while making it more difficult for patent owners to enforce their rights.
He said the language involving customer stays was too broad, not limited to end users or customers, and would allow companies higher in the supply chain to seek stays even as they profited from the infringement. The joinder provision exposed investors in small businesses to personal liability under the related fee-shifting provision. He argued that the bill’s heightened pleading standard erected too high a barrier to sue infringers while time was of the essence because infringement continued. House Judiciary Committee Chairman BOB GOODLATTE (R-Va.) defended his bill as protecting companies like Pate’s. He said legitimate businesses had no reason to be concerned.
Underwood, speaking for the Independent Community Bankers of America, recommended the committee require greater specificity in patent demand letters, make permanent the USPTO’s Covered Business Method review program, and ensure that vendors provide community banks warranties and indemnify them against infringement claims.
Moore said his company had received a patent demand letter claiming its app infringed a “universally common technology.” However, Apple had already licensed the patent and provided the licensed technology to TMSoft. Moore called for end user protection like allowing stays of suits against customers while suits proceed against manufacturers.
Written statements and a video of the hearing are available on the committee website.
