Cárdenas, Farenthold Protect American Companies From 'Patent Trolls'

Today, U.S. Reps. Tony Cárdenas (D-San Fernando Valley, Calif.) and Blake Farenthold (R-Corpus Christi, Texas) reintroduced the “Trade Protection Not Troll Protection Act,” a bill to protect American companies at the International Trade Commission (ITC) from abusive litigation at the hands of patent trolls.

The legislation will take steps to prevent patent assertion entities (PAEs), also known as “patent trolls,” from exploiting an outdated law. PAEs, who do not make or sell any products, abuse the International Trade Commission patent process by purchasing patents and then suing American employers for products already being manufactured and on the market.

Prior to 2006, PAEs had filed virtually no complaints under the 1930 Tariff Act, the law that governs the International Trade Commission (ITC). However, since 2006, this has substantially changed, and as of 2012, PAEs brought 39% of patent investigations at the ITC.

The rise of PAE cases at the ITC is at odds with the ITC’s core purpose -- to protect domestic industry from abusive trade practices by companies importing foreign goods. PAEs were not contemplated, and did not exist in their modern form, when Congress last updated the ITC’s statute in 1988.

PAEs do not intend to make or sell an alternative to the product covered by the patent – their goal is not to prevent imports, but to extract licensing fees. The ITC was never intended to protect this type of activity.

“The law we’re fixing with this legislation was created to protect American businesses,” said Cárdenas. “Instead, thanks to these patent trolls, American businesses are being crippled by the bureaucracy it takes to fight these claims. I am happy to work with Congressman Farenthold to help bring balance back to the ITC patent process in order to allow our entrepreneurs to produce outstanding products while we protect legitimate infringement on American patents.”

“Abusive patent litigation is a drag on our economy and it stifles innovation,” said Farenthold. “This problem impacts businesses and industries of all types, and it affects the jobs of the employees who work for them. Everyone from inventors, start-ups, and mid and large sized businesses face this threat. Our legislation curbs the problem by targeting abusive patent trolls and discouraging frivolous patent lawsuits.”

Along with other improvements, the Trade Protection Not Troll Protection Act will mandate that PAEs have a vested interest in the patent, including development of the product described. This bill would give the ITC more flexibility to ensure an investigation is in the public interest at any time during the case. Currently, public interest factors are considered when making a final determination. The bill would also codify an important program, known as the 100-day pilot project, established by the ITC in 2013, to allow for expedited fact-finding and an abbreviated hearing.

The legislation has been supported by a broad coalition of American companies including Dell, Ford, Google, Cisco, HP Inc. and Broadcom.


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