Nov 22 - The Independent Community Bankers of America has thanked members of the House Judiciary Committee for advancing legislation to address the increasing problem of abusive patent-infringement demands. The committee has approved the Innovation Act of 2013 (H.R. 3309), which includes a provision that would make it easier for community banks and other small businesses to challenge frivolous patents.
“Managing aggressive and frivolous patent lawsuits has become an expensive distraction for an increasing number of community banks and other legitimate businesses,” ICBA President and CEO Camden R. Fine said. “H.R. 3309 is a strong first step in an ongoing effort to address the abuse of the patent system and the proliferation of patent-assertion entities.”
H.R. 3309, introduced by House Judiciary Committee Chairman Bob Goodlatte (R-Va.), would help address the growth of patent-assertion entities, which assert infringement of poor-quality business-method patents by legitimate businesses, including many community banks. Financial institutions of all sizes have been targeted by PAEs, which assert low-quality business-method patents through vaguely worded demand letters or intentionally vague complaints.
Components of the H.R. 3309 would help alter the business model of these entities by removing some of their financial incentive to assert low-quality patents in the hope of quick settlements. The legislation includes an ICBA-advocated provision that would allow the director of the Patent and Trademark Office to waive the costly filing fee required to initiate a transitional proceeding at the PTO that re-examines the validity of these patents. Absent a waiver, it would be cost-prohibitive for community banks to petition the PTO.
Further, ICBA has repeatedly noted that as end users of financial products and services purchased from vendors, community banks should not be on the hook for the infringement claims related to those products and services. To address this problem, ICBA is encouraging Congress to amend current law to ensure that vendors that sell products or services to community banks provide the appropriate warranties and indemnification to protect end users from infringement claims.
For more information, visit www.icba.org.