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National Restaurant Association - House passes bill to curb patent abuse

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House passes bill to curb patent abuse

In what the National Restaurant Association considers a solid step in providing businesses with relief from abusive patent infringement suits, the House of Representatives on Thursday passed the bipartisan Innovation Act, H.R. 3309, which takes several steps to curb frivolous lawsuits brought by patent trolls.

The House adopted the legislation by a vote of 325-91.

Patent trolls, also known as patent-assertion entities, are companies that seek to profit by claiming to own patents to common business tools and demanding settlements and licensing fees from businesses using the tools. Restaurants have been a frequent target of patent trolls, which often target restaurants’ use of technology like free WiFi or Web-based tools like store locators and nutrition calculators. A typical tactic by patent trolls involves sending thousands of vague demand letters to businesses that cite the cost of defending an infringement lawsuit—often over $1 million—in an effort to get the businesses to pay the much lower fee or settlement to continue using the technology. Many businesses lack the resources to defend an infringement suit and opt to pay the fee or stop using the technology.

The bipartisan House bill, introduced by Rep. Bob Goodlatte (R-Va.) and co-sponsored by Reps. Peter DeFazio (D-Ore.),  Zoe Lofgren (D-Calif.) and  a number of representatives from both parties, aims to reduce abusive patent troll activity through  several steps, including increasing transparency requirements by parties bringing infringement suits and improving the patent litigation process. The NRA played a key role in the legislation’s development and has called for additional legislation to enhance transparency in patent trolls’ demand letters, which are often vaguely worded and fail to disclose critical information needed for recipients to effectively evaluate the trolls’ claims.

The NRA, along with multiple partners from the technology, foodservice and hospitality industries, has been a leading advocate for legislation to curb patent abuse and was recognized on the House floor for its work on the issue. Representatives acknowledged that additional work on demand-letter transparency was necessary to increase protection against frivolous infringement suits. The Association also supports the Demand Letter Transparency Act, introduced last month by Reps. Jared Polis (D-Colo.) and Tom Marino (R-Pa.). In the Senate, Sens. Patrick Leahy (D-Vt.) and Mike Lee (R-Utah) have introduced the Patent Transparency and Improvement Act, which targets the widespread sending of demand letters, increases disclosure requirements in demand letters and improves resources for small businesses targeted by patent trolls.

“The National Restaurant Association commends Reps. Goodlatte, DeFazio, Lofgren and members of both parties on passing the Innovation Act of 2013,” said Scott DeFife, NRA executive vice president, policy and government affairs. “While H.R. 3309 is a critical step in countering abuses in the patent system, any final reform package should do more to increase patent troll demand letter transparency and further strengthen patent litigation reform tools. Every day that goes by, without new laws in place, puts restaurateurs at greater risk of being victimized by patent trolls. The time to act is now, and we encourage Congress to keep the reform process moving forward.”

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