Representatives propose Demand Letter Transparency Act of 2013 in efforts to regulate pre-litigation patent infringement settlement demands.
Representatives recently proposed the Demand Letter Transparency Act of 2013 (H.R. 3540), seeking to strictly regulate the substance of patent infringement demand letters. The proposed regulations are intended to target seemingly abusive patentee-plaintiffs who monetize patents through threatened litigation, relying on the high cost of patent suits to drive settlement. Dennis Crouch reports the following “interesting features” on blog Patently-O:
Any demand letter must include:
A listing of each claim being asserted and a listing of each accused device; -If indirect infringement is claimed, an explanation of the underlying direct infringement; -A description of the principle business of the party alleging infringement; -A list of other cases and review proceedings where the patent was asserted; -Identifying of any licensing term or pricing commitments associated with the asserted patent; -A listing of all people who have a direct financial interest in the outcome of the action, and a description of the agreements providing the legal basis for these financial interests; and -A statement to the recipient that 'You are not required to respond to this letter by law.'
A 20-demand-level threshold that raises heightened requirements, including the submission of demand information regarding the demands to the USPTO that will then be publicly available. (i.e., once a patentee sends out 20 demand letters, then it must begin complying with certain reporting requirements).
Failure to abide by the demand letter requirements would result in abandonment of the patent; other financial penalties; and also action by the FTC.
Under the statute, a demand letter is defined broadly as any 'written communication directed to an unaffiliated third party stating or indicating, directly or indirectly, that the intended recipient or anyone affiliated with that recipient is or may be infringing a patent, or may bear liability or owe compensation to another because of such patent.'
There are camps who feel the proposed regulations overreach their intended targets and will result in collateral damage to unwitting businesses seeking to license company technology.
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