Terry introduces bill to curb frivolous demand letters by patent trolls

Lee Terry

Lee Terry

Rep. Lee Terry (R-Neb.) released draft legislation last week that would address frivolous patent demand letters used by so-called patent trolls to extract settlements from businesses and financial institutions.

The legislation joins a similar bipartisan bill introduced in the Senate by Sen. Patrick Leahy (D-Vt.), the chairman of the Senate Judiciary Committee, which is currently debating the legislation. The committee will hold a meeting on Thursday to discuss the bill.

Terry said his legislation would enhance transparency and increase accountability to expose and prevent fraudulent claims of patent infringement by requiring demand letters to include certain information to help companies determine whether a demand letter is legitimate.

The bill would also empower the FTC to fine companies that engage in fraudulent patent demand practices and provide states’ attorneys general with the power to enforce the federal standard.

“Patent trolls cost American companies tens of billions of dollars each year and are threatening job creation and innovation,” Terry said. “We heard from countless small businesses about the destructive consequences of these scams, and after listening to these concerns, it became clear Congress needs to act to stop this growing abuse. But we must also be careful not to reach too broadly and limit legitimate business practices. This draft legislation is the first step in trying to find a sensible solution, and next week, we will hear from interested parties as we continue to work toward a balanced bill.”

The House Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade, which is chaired by Terry, will hold a hearing on Thursday to review the draft legislation.

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