U.S. House panel approves bill to rein in patent fights

WASHINGTON, July 10 Thu Jul 10, 2014 4:49pm EDT

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WASHINGTON, July 10 (Reuters) - A U.S. House of Representatives subcommittee on Thursday approved a draft bill aimed at reining in companies that seek licensing fees for invalid patents or are otherwise dishonest in writing what are known as "demand letters."

The Energy and Commerce Committee subcommittee on Commerce, Manufacturing and Trade voted 13-6 to approve a draft of the Targeting Rogue and Opaque Letters Act, or TROL Act. It will next be considered by the full committee.

The bill has provoked controversy because it would allow the Federal Trade Commission to pursue companies that are dishonest in demanding licensing for patents but only if it can prove bad faith - essentially making it more difficult for the agency.

Further, the draft bill, if it becomes federal law, would override tougher measure passed by a handful of states.

Lawmakers have made several attempts to tackle frivolous patent litigation, which has recently moved from the tech and pharmaceutical sectors into areas such as retailing, where patent fights had been nearly unknown.

The bill's stated goal is to attack the practice by some companies which, critics say, write letters demanding licensing fees without first establishing that infringement exists or disclosing who owns the patent. Critics say these companies hope to badger their targets into paying out of fear.

The bill's acronym - TROL - is a play on "patent troll," the term commonly used to refer to companies that try to assert patent rights in an attempt to collect licensing fees but do not make products or offer services based on those patents.

Senator Claire McCaskill, a Democrat from Missouri, has introduced a similar bill in the Senate.

An attempt to win congressional approval for a broader attack on frivolous patent litigation fizzled earlier this year. That effort was led by Senator Patrick Leahy, a Vermont Democrat, and Representative Bob Goodlatte, a Virginia Republican.

The White House has urged lawmakers to take steps to curb abusive lawsuits. And the FTC has begun a study of patent assertion entities with an eye toward reining in the worst of them. (Reporting by Diane Bartz; Editing by Jonathan Oatis)

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