WASHINGTON, July 9 Members of a U.S. House of
Representatives panel disagreed on Wednesday on elements of a
bill to rein in companies that demand licensing fees for invalid
patents or are otherwise dishonest in writing what are known as
The measure would give the Federal Trade Commission (FTC)
the power to impose civil penalties on patent assertion
entities, sometimes called "patent trolls," which make dishonest
The bill, introduced by Representative Lee Terry, a Nebraska
Republican, would require the agency to prove that a company it
wants to penalize has acted in "bad faith." Further, the bill
would pre-empt stricter laws already passed by a handful of
Terry said his measure "strikes the appropriate balance" by
respecting the free speech rights of companies while also
stopping them from sending dozens or hundreds of aggressive and
sometimes inappropriate letters demanding licensing fees.
A subcommittee of the House of Representatives Energy and
Commerce committee debated the bill on Wednesday, with a vote on
whether to advance the measure expected on Thursday. It is
called the "Targeting Rogue and Opaque Letters Act of 2014," or
Representative Henry Waxman, a California Democrat, opposed
portions of the bill that pre-empt state laws or put additional
burdens on the FTC to prove a licensing demand is dishonest.
Jan Schakowsky, an Illinois Democrat, agreed. "I don't think
the TROL Act adequately solves the problem," she said.
Following the hearing, Terry said he would oppose any effort
to allow state laws to supersede the federal bill. He said such
a change "simply emasculates" it.
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
intellectual property is less well known.
In some instances, critics complain companies 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
The bill allows the FTC to pursue companies that write
demand letters if they misrepresent who owns a patent; blanket
recipients with unfounded threats of lawsuits; or demand
licensing fees for patents that have been declared invalid. The
bill sets a maximum penalty of $5 million.
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 and Representative
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
(Reporting by Diane Bartz, editing by Ros Krasny and David