House Tries One More Time: Targeting Rogue and Opaque Letters Act of 2014 ("TROL Act")

by McDonnell Boehnen Hulbert & Berghoff LLP
Contact

Terry, LeeU.S. Representative Lee Terry (R-NE) opened a recent subcommittee meeting by quoting Thomas Edison:  "The most certain way to succeed is to try one more time."  The occasion was the meeting of the House's Energy and Commerce Committee's Subcommittee on Commerce, Manufacturing and Trade, for which Rep. Terry is the Chair.  Specifically, the subcommittee was marking-up Rep. Terry's discussion draft of the Targeting Rogue and Opaque Letters Act of 2014, more affectionately known as the TROL Act.  Indeed, Rep. Terry is attempting "one more time" to pass patent reform legislation this year.  However, this time, his bill has received letters of support from such organizations as the Biotechnology Industry Organization ("BIO"), the Intellectual Property Owners Association ("IPO"), the American Intellectual Property Law Association ("AIPLA"), and the Innovation Alliance.  (These letters can be found on the committee's website.  This wide support is likely due to the narrow focus of the draft legislation -- the sending of abusive demand letters.

The text of the TROL Act is not dissimilar to a comparable bill pending in the Senate, introduced by Sen. Claire McCaskill (D-MO).  However, that bill appears to have stalled, so the House may again be the first to pass this version of patent reform legislation.  In addition, various state legislative bodies have either introduced or passed similar bills at the state level, and, of course, the attorneys general of some states have been going after the so-called patent troll practice of sending abusive demand letters.  The TROL Act specifically preempts these state initiatives.  In section 4(a)(1), the "Act preempts any law, rule, regulation, standard, or other provision . . . relating to the transmission or contents of communications relating to the assertion of patent rights."  However, the Act does not "preempt of limit" any other provision "relating to acts of fraud or deception, and any State trespass, contract, or tort law."  TROL Act, section 4(a)(2).  And, with regard to the state attorneys general, the Act provides the authority for them to bring civil actions pursuant to the TROL Act in U.S. district courts, although the provision allows the Federal Trade Commission ("FTC") to intervene if it wishes.

So what specifically does this bill require?  It would make it "an unfair or deceptive act or practice" to "engage in a pattern or practice of sending written communications that" allege patent infringement if certain conditions apply.  First, if the sender states or represents, in bad faith, that the sender has rights in the patent or is the exclusive licensee, that a civil action has been filed (either against the recipient or other persons), that legal action will be taken, that persons other than the recipient have purchased a license, that an investigation of the alleged infringing activity has occurred, or that a lawsuit had previously been filed when in reality the accused activity had been found not to infringe.  Second, it will be "an unfair or deceptive act or practice" if the patent holder, in bad faith, seeks compensation for a patent claim that has been held unenforceable, for activities that occurred after the expiration of a patent, or for activity that was in fact authorized under the patent.  Finally, the Act would make it "an unfair or deceptive act or practice" to fail to include the following information, in bad faith:  the identity of the person asserting the patent right, including any parent entity unless a public company; at least one patent; at least one product or service that infringes; a description of the infringement; and a name and contact information.

In all of the above-referenced cases, bad faith is required.  The Act defines bad faith as (A) making "knowingly false or knowingly misleading statements, representations, or omissions"; (B) making statements with reckless indifference; or (C) making statements with the high probability that they will deceive.  Several subcommittee members complained that this provision sets too high a standard by requiring proof of knowledge or reckless indifference.  However, defenders of the Act pointed out that nothing has changed with regard to the FTC's Section 5 authority to seek injunctive relief.  It was also pointed out that this section allows for civil penalties to be levied directly against corporate officers, and therefore actual knowledge or reckless indifference should be required.

There were additional criticisms levied against the Act during the mark-up, which occurred on June 9-10, 2014.  For example, Rep. Jan Schakowsky (D-IL), ranking member of the subcommittee, complained about the preemption of state laws aimed at preventing abusive enforcement.  There was the sentiment expressed by several people present that the states are taking active steps to curb the problem, and Congress shouldn't squash these efforts.  Another concern was that the Act does not go far enough.  While recognizing that an omnibus bill is unlikely from the Senate in the near future, Rep. Peter Welch (D-VT) expressed concern that "the passage [of the TROL Act] is going to become an excuse for the Senate not to act on what is a comprehensive Bill that was a bipartisan-strong vote passed by the House of Representatives."  Nevertheless, after the bill was amended to clarify the "Affirmative Defense" section, the bill passed out of the subcommittee with a vote of 13 to 6.  A video of the mark-up can be found here, along with other supporting documentation.  This bill should now be taken up by the Committee on Energy and Commerce sometime in the near future.  We will continue to monitor and report on the progress of the TROL Act.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McDonnell Boehnen Hulbert & Berghoff LLP | Attorney Advertising

Written by:

McDonnell Boehnen Hulbert & Berghoff LLP
Contact
more
less

McDonnell Boehnen Hulbert & Berghoff LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.