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95–994 PDF 2016

H.R. lll, THE TARGETING ROGUE AND 

OPAQUE LETTERS ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, 

AND TRADE 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

APRIL 16, 2015 

Serial No. 114–32 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

MICHAEL C. BURGESS, Texas 

Chairman 

LEONARD LANCE, New Jersey 

Vice Chairman 

MARSHA BLACKBURN, Tennessee 

GREGG HARPER, Mississippi 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

GUS M. BILIRAKIS, Florida 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

FRED UPTON, Michigan (ex officio) 

JANICE D. SCHAKOWSKY, Illinois 

Ranking Member 

YVETTE D. CLARKE, New York 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

BOBBY L. RUSH, Illinois 

G.K. BUTTERFIELD, North Carolina 

PETER WELCH, Vermont 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 1 

Prepared statement .......................................................................................... 2 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 3 

Prepared statement .......................................................................................... 4 

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois, prepared statement ............................................................................ 75 

WITNESSES

David W. Long, Partner, Kelley Drye & Warren, LLP, on Behalf of Innovation 

Alliance ................................................................................................................. 5 

Prepared statement .......................................................................................... 8 

Gregory Dolin, Associate Professor of Law, University of Baltimore School 

of Law .................................................................................................................... 20 

Prepared statement .......................................................................................... 22 

Diane Lettelleir, Senior Managing Counsel, Litigation, J.C. Penney Company, 

Inc., on Behalf of United for Patent Reform ...................................................... 27 

Prepared statement .......................................................................................... 29 

Charles Duan, Director, Patent Reform Project, Public Knowledge .................... 39 

Prepared statement .......................................................................................... 41 

SUBMITTED MATERIAL

Discussion draft, H.R. lll, the Targeting Rogue and Opaque Letters Act, 

submitted by Mr. Burgess ................................................................................... 77 

Letter of July 9, 2014, from Ellen F. Rosenblum, Attorney General, State 

of Oregon, to Mr. Upton and Hon. Henry A. Waxman, submitted by Ms. 

Schakowsky .......................................................................................................... 87 

Letter of July 9, 2014, from William H. Sorrell, Attorney General, State 

of Vermont, to Hon. Lee Terry and Ms. Schakowsky, submitted by Ms. 

Schakowsky .......................................................................................................... 90 

Letter of July 10, 2014, from Janet T. Mills, Attorney General, State of 

Maine, to Hon. Lee Terry and Ms. Schakowsky, submitted by Ms. 

Schakowsky .......................................................................................................... 94 

Letter of July 18, 2014, from Roy Cooper, Attorney General, State of North 

Carolina, to Mr. Upton and Mr. Waxman, submitted by Ms. Schakowsky ..... 95 

Letter of April 16, 2015, from Paige Anderson, Director, Government Relations, National Association of Convenience Stores, to Mr. Burgess and Ms. 

Schakowsky, submitted by Mr. Burgess ............................................................ 97 

Statement of American Hotel and Lodging Association, April 16, 2015, submitted by Mr. Burgess ......................................................................................... 99 

Letter of April 16, 2015, from American Bankers Association, et al., to Mr. 

Burgess and Ms. Schakowsky, submitted by Mr. Burgess ............................... 101 

(1) 

H.R. lll, THE TARGETING ROGUE AND 

OPAQUE LETTERS ACT 

THURSDAY, APRIL 16, 2015 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND

TRADE, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 11:02 a.m., in room 

2123, Rayburn House Office Building, Hon. Michael C. Burgess 

(chairman of the subcommittee) presiding. 

Members present: Representatives Burgess, Lance, Guthrie, Bilirakis, Brooks, Mullin, Schakowsky, Clarke, Kennedy, Ca ́ rdenas, 

and Pallone (ex officio). 

Staff present: Charlotte Baker, Deputy Communications Director; 

James Decker, Policy Coordinator, Commerce, Manufacturing, and 

Trade; Graham Dufault, Counsel, Commerce, Manufacturing, and 

Trade; Melissa Froelich, Counsel, Commerce, Manufacturing, and 

Trade; Kirby Howard, Legislative Clerk; Paul Nagle, Chief Counsel, Commerce, Manufacturing, and Trade; Olivia Trusty, Professional Staff, Commerce, Manufacturing, and Trade; Michelle Ash, 

Democratic Chief Counsel, Commerce, Manufacturing, and Trade; 

Christine Berenholz, Democratic Chief Clerk; Jeff Carroll, Democratic Staff Director; Lisa Goldman, Democratic Counsel; Brendan 

Hennessey, Democratic Policy and Research Advisor; and Ryan 

Skukowski, Democratic Policy Analyst. 

Mr. BURGESS. The Subcommittee on Commerce, Manufacturing, 

and Trade will now come to order. 

The Chair will recognize himself for 5 minutes for the purpose 

of an opening statement. 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

I do want to welcome all to our legislative hearing to consider the 

Targeting Rogue and Opaque Letters Act of 2015. 

Last year, the subcommittee held a series of negotiations resulting in the draft legislation we consider today. Although the draft 

bill passed this subcommittee with bipartisan support, there are 

some who believe the text could be amended narrowly to achieve 

better protections for those who receive demand letters. So today 

we look forward to hearing from our panelists about how we can 

make some targeted changes to the draft text to achieve this goal. 

The problem of abusive demand letters has set off a surge in 

State activity to address this issue. Unfortunately, many States 

2 

have unintentionally created problems for patent holders in trying 

to address the harms created by bad actors. For example, State 

courts should not be empowered to determine the reasonable cost 

of a patent license. Nor should the definition of a bad-faith demand 

letter be allowed to disregard the First Amendment rights of patent 

owners. 

Causes of action under State law are in trouble in the demand 

letter space when they have been removed to Federal court. Federal Circuit doctrine generally controls patent matters. As we 

heard at our first demand letter hearing earlier this year, the Federal Circuit jurisprudence preempts all but a narrow set of cases 

in the demand letter context. 

When Nebraska attempted to enjoin MPHJ Technology Investments from victimizing Nebraska businesses and residents, the 

case wound up in Federal court. There, it was dismissed under the 

Federal court’s Noerr-Pennington doctrine, among other things. 

Most of us agree that the MPHJ was indeed attempting to trick 

demand letter recipients into paying undue license fees. Federal 

legislation would provide State attorneys general a remedy for 

those demand letter recipients who may not be protected because 

State-level safeguards are negated. 

These are a couple of the compelling reasons for Federal legislation and preempting the State laws that directly deal with demand 

letters. We do aim to move this bill forward, and I believe it could 

become law so long as it narrowly addresses the demand letter 

problem with due respect to the Constitution. 

I want to thank the witnesses for being here. You will all be introduced, but, Ms. Lettelleir, as a fellow Texan, I particularly want 

to welcome you to our panel today. 

[The prepared statement of Mr. Burgess follows:] 

PREPARED STATEMENT OF HON. MICHAEL C. BURGESS

Last year, the subcommittee held a series of negotiations resulting in the draft 

legislation we consider today. 

Although the draft bill passed our subcommittee with bipartisan support, I believe 

the text could be amended narrowly to achieve better protections for recipients of 

demand letters. 

So today we look forward to hearing from the panelists about how we can make 

some targeted changes to the draft text to achieve this goal. 

The problem of abusive demand letters has set off a surge in State activity to address the issue. 

Unfortunately, many States have unintentionally created problems for patent 

holders in trying to address the harms created by bad actors. 

For example, State courts should not be empowered to determine the ‘‘reasonable’’ 

cost of a patent license. Nor should the definition of a bad faith demand letter be 

allowed to disregard the First Amendment rights of patent owners. 

Causes of action under State law are in trouble in the demand letter space-when 

they have been removed to Federal court, Federal Circuit doctrine generally controls 

patent matters. As we heard in our first demand letter hearing this year, Federal 

Circuit jurisprudence preempts all but a narrow set of cases in the demand letter 

context. 

When Nebraska attempted to enjoin MPHJ from victimizing Nebraska businesses 

and residents, the case wound up in Federal court. There, it was dismissed under 

the Federal Circuit’s Noerr-Pennington doctrine, among other things. 

Most of us agree that MPHJ was, indeed, attempting to trick demand letter recipients into paying undue license fees. Federal legislation would provide State attorneys general a remedy for those demand letter recipients who may not be protected because State-level safeguards are negated. 

3 

These are a couple of the compelling reasons for Federal legislation and for preempting the State laws that directly deal with demand letters. 

We aim to move this bill forward and I believe it could become law so long as 

it narrowly addresses the demand letter problem with due respect to the Constitution. 

[The discussion draft appears at the conclusion of the hearing.] 

Mr. BURGESS. I would like to recognize the ranking member of 

the full committee, Mr. Pallone, for 5 minutes for an opening statement. 

Sir, you are recognized. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman. 

The patent system plays a crucial role in promoting innovation 

by providing an incentive to inventors to make costly and time-consuming investments in research and development of new inventions. At the same time, the system requires that the inventions be 

disclosed so that others can build upon the inventions. 

At our last hearing on this issue in February and as early as the 

fall of 2013 in the Subcommittee on Oversight and Investigations, 

we heard from stakeholders that some businesses, especially small, 

Main Street ones like coffee shops, Realtors, hotels, restaurants, 

and retailers, have been receiving abusive patent demand letters. 

Efforts to combat abusive demand letters have already begun, and 

some State attorney generals have taken legal action to protect 

their citizens from unfair and deceptive demand letters. In addition, 20 States have already enacted legislation to tackle this abusive activity. 

Furthermore, the FTC brought an administrative complaint 

against MPHJ Technologies, a well-known patent troll. That case 

was recently settled through a consent order that prohibits MPHJ 

from making deceptive statements in its demand letters. 

The question before us is simple: Are those current efforts 

enough to combat the problem, or should Congress legislate in this 

area? Legislative solutions to address these vague, threatening, unsubstantiated, and often inaccurate letters have received bipartisan 

support, so I have hope that we can find a solution that all Members are able to support. 

Last Congress, this committee held three hearings, and the subcommittee marked up a bill. And while I support efforts to find a 

tailored relief for our constituents receiving these abusive letters, 

we should not undermine the great work already occurring. For example, I will support efforts to ensure that States and the FTC continue to be able to enforce against fraudulent actors and are able 

to collect civil penalties from wrongdoers. 

The States and the FTC are experts in consumer protection. 

These are not complicated patent law cases, as some suggest, but, 

instead, garden-variety fraud and deception cases. States may be 

particularly well suited to handle these issues because they best 

understand the circumstances of their residents. 

However, I cannot support the bill before us today. It includes 

problematic language that does not move us forward. Among other 

4 

things, it created a knowledge standard, one not typically needed 

to prove fraud, and it preempts stronger State laws. 

As I said yesterday in the context of data security and breach notification, if we as a Congress choose to legislate, we need to make 

sure that we are furthering the interests of consumers. As I also 

mentioned yesterday, if Congress seeks to preempt specific State 

laws, especially on issues in which the States have been leaders 

fighting unfair and deceptive acts, such as false and misleading demand letters, the Federal effort should be at least as strong as 

those State laws. 

The goal of this legislation might be well intentioned, but the 

drafting is flawed. I am happy that this issue is going through regular order anew this Congress, and I urge my Republican colleagues to work with us in a bipartisan fashion to get the language 

right. 

And thank you, Mr. Chairman. I yield back. 

[The prepared statement of Mr. Pallone follows:] 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

Mr. Chairman, the patent system plays a crucial role in promoting innovation by 

providing an incentive to inventors to make costly and time-consuming investments 

in research and development of new inventions. At the same time, the system requires that the inventions be disclosed so that others can build upon the inventions. 

At our last hearing on this issue in February, and as early as the fall of 2013 

in the Subcommittee on Oversight and Investigations, we heard from stakeholders 

that some businesses, especially small, main street ones like coffee shops, realtors, 

hotels, restaurants and retailers, have been receiving abusive patent demand letters. 

Efforts to combat abusive demand letters have already begun. Some State attorneys general have taken legal action to protect their citizens from unfair and deceptive demand letters. In addition, 20 States have already enacted legislation to tackle 

this abusive activity. 

Furthermore, the FTC brought an administrative complaint against MPHJ Technologies, a well-known patent troll. That case was recently settled through a consent 

order that prohibits MPHJ from making deceptive statements in its demand letters. 

The question before us is simple; are those current efforts enough to combat the 

problem or should Congress legislate in this area? Legislative solutions to address 

these vague, threatening, unsubstantiated, and often, inaccurate letters have received bipartisan support, so I have hope that we can find a solution that all members are able to support. 

Last Congress, this committee held three hearings, and the subcommittee marked 

up a bill. While I will support efforts to find tailored relief for our constituents receiving these abusive letters, we should not undermine the great work already occurring. 

For example, I will support efforts to ensure that States and the Federal Trade 

Commission (FTC) continue to be able to enforce against fraudulent actors and are 

able to collect civil penalties from wrongdoers. The States and the FTC are experts 

in consumer protection. These are not complicated patent law cases as some suggest, but instead garden variety fraud and deception cases. States may be particularly well-suited to handle these issues because they best understand the circumstances of their residents. 

However, I cannot support the bill before us today. It includes problematic language that does not move us forward. Among other things, it created a knowledge 

standard, one not typically needed to prove fraud, and it pre-empts stronger State 

laws. 

As I said yesterday in the context of data security and breach notification, if we 

as a Congress choose to legislate, we need to make sure that we are furthering the 

interests of consumers. As I also mentioned yesterday, if Congress seeks to pre-empt 

specific State laws -especially on issues on which the States have been leaders fighting unfair and deceptive acts, such as false and misleading demand letters, the Federal effort should be at least as strong as those State laws. 

5 

The goal of this legislation might be well-intentioned, but the drafting is seriously 

flawed. I am happy that this issue is going through regular order anew this Congress and I urge my Republican colleagues to work with me in a bipartisan fashion 

to get the language right. Thank you. 

Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

Let me just ask on the Republican side, is there any member 

who seeks time for an opening statement? 

Seeing no request for time, I would ask the ranking member of 

the full committee, is there any member on the Democratic side 

who seeks time for an opening statement? 

Mr. PALLONE. No. 

Mr. BURGESS. Very well. Seeing none, that concludes time for the 

opening statements. 

Again, I want to welcome all of our witnesses and thank all of 

you for agreeing to testify before the committee today. 

Our witness panel for today’s hearing will include Mr. David W. 

Long, a partner at Kelley Drye & Warren, testifying on behalf of 

the Innovation Alliance; Mr. Gregory Dolin, associate professor of 

law and co-director of the Center for Medicine and Law at the Baltimore University School of Law; Ms. Diane Lettelleir, senior managing counsel, litigation, J.C. Penney Corporation, testifying on behalf of United for Patent Reform; and Mr. Charles Duan, director 

of the Patent Reform Project for Public Knowledge. 

Our first witness today will be Mr. David Long. 

Sir, you are recognized for 5 minutes for a summarization of your 

testimony. And thank you for being here. You are recognized. 

STATEMENTS OF DAVID W. LONG, PARTNER, KELLEY DRYE & 

WARREN, LLP, ON BEHALF OF INNOVATION ALLIANCE; 

GREGORY DOLIN, ASSOCIATE PROFESSOR OF LAW, UNIVERSITY OF BALTIMORE SCHOOL OF LAW; DIANE LETTELLEIR, 

SENIOR MANAGING COUNSEL, LITIGATION, J.C. PENNEY 

COMPANY, INC., ON BEHALF OF UNITED FOR PATENT REFORM; AND CHARLES DUAN, DIRECTOR, PATENT REFORM 

PROJECT, PUBLIC KNOWLEDGE 

STATEMENT OF DAVID W. LONG 

Mr. LONG. Thank you, Chairman Burgess. I am David Long, a 

patent attorney at the Kelley Drye & Warren law firm. 

I am here today on behalf of Innovation Alliance to discuss patent demand letters. Innovation Alliance is a coalition of researchand-development-focused companies that believe in a strong patent 

system in which innovative businesses can thrive. Innovation Alliance supports the draft legislation we are discussing today and encourages its introduction as a balanced approach to address the 

vast majority of abusive patent behavior that has garnered so 

much attention. 

Now, the resultant negative views of patent law from such negative attention is unfortunate and unwarranted. I love innovation, 

and I am very proud of our U.S. patent system that has fueled it. 

Before entering the legal profession, I earned a master’s degree in 

electrical engineering and worked about 5 years in industry. In 

fact, I was a rocket scientist. 

6 

I have practiced U.S. Patent law for about 20 years now. I started as a law clerk at the U.S. Court of Appeals for the Federal Circuit in 1995 and have since focused on patent counseling and representation before courts and the U.S. Patent and Trademark Office. I am very active in national and international patent law organizations, and I have seen firsthand that the U.S. patent system 

is the greatest known system for innovation. 

Now, consider the telecommunications industry in which my 

practice is focused. Not too long ago, a so-called mobile phone was 

actually a suitcase-size device lugged around by the privileged 

elite. Today, everyday people everywhere carry mobile phones in 

their pockets, and they do many remarkable things with them. And 

patents fueled that innovation every step of the way. 

So the patent system certainly is not broken, as some have suggested, but, like all thriving systems, it must be tweaked from time 

to time, and that is why we are here today. 

So a fundamental goal of the U.S. patent system is to encourage 

patent owners to provide notice of their patent rights to potential 

infringers. That way, they can determine whether to stop the alleged infringement, negotiate a license, design around the patent, 

or otherwise take some appropriate action. 

By and large, the bulk of business-to-business patent notice letters, or what the draft legislation calls patent demand letters, are 

legitimate efforts to give notice and to start a dialogue that allows 

the parties to negotiate and reach a reasonable business solution. 

What brings us here today is concern about deceptive demand 

letters. These generally arise from a few opportunistic bad actors 

with certain business models, what some call patent assertion entities, who mass-mail demand letters to small businesses that are 

not familiar with patents or the underlying technology, and, therefore, they maybe vulnerable to deceptive demand letters. 

Businesses typically turn to in-house or outside counsel to address the specific legal issues that arise as a normal part of their 

business. For example, they turn to employment lawyers who address human resources issues, they turn to transactional lawyers 

who address commercial contract issues. Technology-oriented businesses routinely turn to patent counsel to address patent demand 

letters that arise as a normal part of their business. But certain 

small businesses outside the technology sector may not have such 

patent counsel or experience, and, therefore, they may be vulnerable to deceptive demand letters. 

So the draft legislation we are discussing today is a properly balanced and measured response to this patent demand letter concern. 

First, the draft legislation properly is directed to entities that 

have a pattern and practice of sending deceptive demand letters, 

what some have called a smash-and-grab practice, where, at the 

nominal cost of a stack of form letters, envelopes, and postage 

stamps, deceptive demand letters are mass-mailed in hopes of getting a large return in the aggregate from many small nuisance settlements paid by vulnerable targets. That smash-and-grab model 

simply does not work if sending one or just a few demand letters, 

so a pattern and practice of deceptive demand letters is where the 

problem lies. 

7 

Second, the draft legislation properly focuses on bad-faith demand letters. This avoids the act being used as a gotcha against 

otherwise good corporate citizens whose demand letters technically 

may have fallen short of the act’s requirement but there is no harm 

and no harm intended. 

Moreover, the Constitution requires a showing of bad faith when 

it comes to Government action against patent demand letters. This 

protects a patent owner’s First Amendment right to petition the 

Government for redress of grievances. And there is universal agreement among the courts that this First Amendment protection includes patent demand letters. 

Third, the draft legislation properly preempts State laws, while 

allowing State attorney generals to protect their constituents from 

deceptive demand letters by invoking this act. 

The key to our U.S. Patent system’s success is that our Constitution specifically entrusts Congress with the power to promote the 

progress of science and useful arts through uniform patent rights. 

The Federal Government has the experience and the authority 

needed to address patent right concerns holistically and uniformly 

in order to maintain a balanced and thriving patent system. 

Thank you, and I look forward to answering your questions. 

[The prepared statement of Mr. Long follows:] 

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Mr. BURGESS. The Chair thanks the gentleman. The gentleman 

yields back. 

The Chair recognizes Mr. Gregory Dolin for 5 minutes for the 

purpose of an opening statement, sir. 

STATEMENT OF GREGORY DOLIN 

Mr. DOLIN. Thank you, Mr. Chairman. 

Chairman Burgess, Ranking Member Pallone, members of the 

subcommittee, thank you for this opportunity to speak with you 

today about the draft bill prohibiting false statements and mandating disclosures in demand letters. 

My name is Gregory Dolin. I would like to note that I am speaking in my personal capacity as a law professor at the University 

of Baltimore School of Law and not on behalf of my employer or 

any other organization that I am affiliated with. 

This draft bill is directed at bad actors who engage in bad-faith 

communications in asserting patents against alleged infringers. 

These communications are known as demand letters. 

At the outset, let me state that this bill is an admirable attempt 

to address bad behavior by some patent owners who abuse the civil 

litigation system. Furthermore, the bill is a significant improvement over previous attempts to address this problem. 

Specifically, the bill commendably preempts State-based legislation that is purportedly aimed at the same problem but, in reality, 

starts to undermine the uniformity of our Nation’s patent laws. An 

owner of the Federal property right should be able to enforce it on 

equal terms in every part of the country. 

The bill is also praiseworthy for its attempts to provide a flexible 

standard against which to judge the patentee’s bad faith. 

Nonetheless, the bill continues to have significant problems. In 

an attempt to address bad-faith communications by bad actors, the 

bill mandates specific disclosures in all demand letters sent by all 

patent owners. This approach may end up discouraging all such 

communications by legitimate and illegitimate claimants alike. Unfortunately, as a result, the draft bill is likely to have significant 

but unintended negative consequences of increasing the amount of 

overall cost of litigation. 

My testimony will focus on two provisions of the draft bill which 

I believe may undermine legitimate patentees’ rights to enforce 

their patents while encouraging more unnecessary litigation. 

First, the significant legal penalties proposed in this bill may discourage patentees from sending demand letters. This would actually be an unfortunate outcome. A demand letter serves the function of informing the recipient that it is infringing on property 

rights secured under Federal law. 

At the same time, demand letters are not a legal prerequisite for 

filing a patent infringement lawsuit. Instead, a demand letter allows the patentee and the accused infringer to begin the process of 

privately evaluating the legal claims and, if warranted, entering 

into a settlement agreement. 

Our justice system has long preferred out-of-court settlements, 

where the parties can strike an agreement making both of them 

better off, to costly judicial interventions which result in a clear 

winner and a clear loser. Our markets also prefer private resoluVerDate Mar 15 2010 15:31 Aug 18, 2016 Jkt 037690 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X32TROLACT\114X32TROLACTWORKING WAYNE
21 

tions of legal claims, as evidenced by stock price fluctuations whenever a significant lawsuit is filed against a company. 

Without the ability to begin the process of private resolution 

through sending of demand letters, patentees are likely to resort to 

lawsuit filings as their initial, as opposed to final, attempt to resolve patent disputes. 

Under the current law, legal filings, such as complaints, answers, 

and motions, are immune from imposition of liability. Thus, under 

the present bill, a patentee may be more at risk for sending a demand letter than he would be for filing a civil action. 

Faced with this choice, a reasonable actor would always prefer 

a lawsuit to a demand letter. In other words, a reasonable actor 

would act completely contrary to the societal preference for private 

resolution of legal disputes. Not only will this place additional burdens on our already overworked judges, but it will ultimately increase costs for both patentees and accused infringers and, therefore, consumers. 

Second, the provisions of this bill seem to paradoxically require 

more disclosures from a patentee who sends a demand letter than 

from one who files a civil action seeking to enforce his patent rights 

in court. 

The Federal rules of civil procedure require a plaintiff to do nothing more than to provide a, quote, ‘‘short and plain statement of 

the claim,’’ end quote. This requirement is satisfied by identifying 

the patent which the plaintiff alleges the defendant infringes and 

the allegedly infringing product. The rules, unlike this present bill, 

do not require a patentee to identify a specific claim that is infringed or to describe in detail how the product infringes the identified patent and the patent’s claim. These additional burdens on the 

patentees will again drive them away from demand letters and toward litigation. 

In conclusion, safeguarding the patent system from abuses by 

bad actors is an important and laudable goal. Abuses in the system 

undermine the efficient operation of our patent laws and, with 

them, the growth of the innovation economy. 

However, in drafting solutions to an admittedly real and serious 

problems, Congress must be careful to ensure that its cure is not 

worse than the disease. Congress should heed the lessons of past 

patent reforms, which have often created as many problems as they 

have solved, and avoid repeating this mistake. 

Whatever route Congress chooses to take, it should ensure that 

it does not undermine legitimate patentees’ ability to enforce their 

patents, less it undermine the necessary incentives for innovation 

and economic growth. 

I thank you, and I look forward to your questions. 

[The prepared statement of Mr. Dolin follows:] 

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Mr. LANCE [presiding]. Thank you very much, Mr. Dolin. 

The committee is going to adjourn. We have just had a call for 

votes on the floor, and we will return after our votes. 

We apologize. I consider this a personal plot against me. I have 

been in the Chair for 2 minutes, and now votes have been called. 

But we look forward to the testimony of the two remaining witnesses and for questions from the committee members following 

that, and we will return as quickly as possible upon completion of 

votes on the floor. 

And so the committee stands in adjournment—recess, recess. 

And I would imagine, perhaps, 30 minutes or 35 minutes. Thank 

you very much. 

[Recess.] 

Mr. BURGESS [presiding]. The subcommittee will come back to 

order. 

I believe, when we adjourned, we were to receive the testimony 

of Ms. Lettelleir. 

You are recognized for 5 minutes for a summarization of your 

testimony, please. 

STATEMENT OF DIANE LETTELLEIR 

Ms. LETTELLEIR. Chairman Burgess, Ranking Member 

Schakowsky, and members of the Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade, I am Diane 

Lettelleir, senior managing counsel of litigation at J.C. Penney. 

J.C. Penney is a 113-year-old company headquartered in Plano, 

Texas. Today, J.C. Penney has over 1,000 stores in 49 States and 

Puerto Rico and employs more than 116,000 associates nationwide. 

I am testifying on behalf of United for Patent Reform, which is 

a diverse group of businesses that includes retailers, grocers, convenience stores, auto companies, auto dealers, trucking companies, 

hoteliers, realtors, homebuilders, and technology companies and 

many other Main Street businesses. 

Patent trolls have a significant impact on Main Street business. 

Since 2012, patent trolls have sued more Main Street companies 

than even technology companies, which means each year Main 

Street businesses are spending millions of dollars and thousands of 

employee man-hours fighting patent trolls. It should not be lost 

that the same money could have been used to expand their business, hire new workers, or invest in new technologies. 

The trolls target Main Street businesses because they often lack 

the legal and technical expertise and the money required to fight 

complex patent infringement claims. Patent trolls take advantage 

of these weaknesses and strategically offer settlements at a level 

set below the cost of litigation. The settlements offered are not 

based on the value of the claimed invention but, rather, on the cost 

of defense. 

This results in a particularly malicious form of blackmail. The 

Main Street company must pay the unjustified settlement or take 

its chances in litigation, where the best-case scenario is spending 

potentially millions of dollars simply to prove that they had done 

nothing wrong. 

This is compounded by the fact that demand letters are often 

vague, misleading, and deceptive. The demand letters usually fail 

28 

to include basic facts that any business would need in order to 

make informed decisions or even an explanation of what the defendant makes or does that allegedlyinfringes. The recipient of 

such a letter has no way of determining their potential liability or 

making an informed decision about the best way to respond. 

This harmful and deceptive practice needs to be stopped. That is 

why members of the United for Patent Reform appreciate your 

leadership and the subcommittee’s work on strengthening enforcement. Although we have some concerns about certain details of the 

proposed legislation, we urge the subcommittee to continue its important work. 

I will briefly touch on important changes we would like to see. 

A more detailed description is included in my written testimony. 

First, we seek the removal of a requirement of a pattern or practice of sending demand letters. The ‘‘pattern or practice’’ language 

creates unnecessary ambiguity about the number of letters that 

must be sent. 

Second, the definition of ‘‘bad faith’’ should be removed. The 

focus should be on the effect on the target companies that receive 

these demand letters, rather than proof of the knowledge of the 

sender. Recipients of demand letters can be harmed by misrepresentations or omissions regardless of whether the party making 

them acknowledges that they are false or misleading. 

We also seek the removal of a separate bad-faith requirement 

from the listed factors. In the original text, certain factors also required establishing bad faith as a separate showing. Requiring that 

bad faith be demonstrated to establish a violation, however, could 

nullify the act’s provisions. 

We also propose a few changes in the structure of the factors, 

which is set forth in more detail in my written testimony. 

In addition, we suggest adding a sub-part that, in effect, requires 

the sender to identify the claims of the patent alleged to be infringed by the recipient. Failure to include such information in a 

demand letter is evidence that the assertion is objectively baseless 

and, thus, made in bad faith. 

Finally, we request the removal of the affirmative defense. The 

affirmative defense would create a loophole that avoids application 

of the act even if the sender was found to have acted in bad faith. 

Instead of an affirmative good-faith defense, we support a list of 

factors relevant to showing that a sender has not acted in bad 

faith. 

We remain committed to working diligently with the committee 

to develop demand letter legislation that will protect our member 

businesses from patent trolls while not compromising the rights of 

legitimate patent holders and that the designated enforcer will support. 

Thank for the opportunity to testify, and I welcome your questions. 

[The prepared statement of Ms. Lettelleir follows:] 

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Mr. BURGESS. The gentlelady yields back. The Chair thanks the 

gentlelady. 

Mr. Duan, you are recognized for 5 minutes for summarization 

of your testimony, please. 

STATEMENT OF CHARLES DUAN 

Mr. DUAN. Thank you. 

Chairman Burgess, Ranking Member Schakowsky, and members 

of the subcommittee, thank you for inviting me to testify today. My 

name is Charles Duan, and I am the director of the Patent Reform 

Project at Public Knowledge. We are a nonprofit organization that 

works at the intersection of technology and consumer policy. I previously worked as a software developer and also as a patent attorney. 

I would like to start today by talking about an event from 1976, 

a hearing held in this very building. The hearing featured a witness who literally wore a mask as he testified about abuses in the 

debt collection industry. The practices he described were frightening: calling debtors every 5 minutes, intimidating children, pretending to be attorneys, and threatening lawsuits. These aggressive 

tactics ultimately led Congress in 1977 to pass the Fair Debt Collection Practices Act, one of the strongest Federal consumer protection laws on the books today. 

These strong-arm tactics are at work again, now in the service 

of abusive patent demand letters. This committee has already held 

three hearings over the last 2 years where witnesses recounted the 

threats, misrepresentations, and deceptive practices used by unscrupulous asserters of patent rights. The situations are highly 

analogous. The bad debt collectors of the 1970s are the bad patent 

royalty collectors of today. 

I would thus commend and thank the subcommittee for taking 

on this issue that affects most directly the smallest American businesses and the smallest American consumers, the ones most in 

need of protection. The members of the subcommittee have worked 

hard, with the aim of crafting a patent demand letter bill that will 

best protect consumers. 

But while the subcommittee has made great strides toward that 

goal, the current draft bill doesn’t adequately protect the consumer 

interests. In particular, we provide the following four recommendations to improve the bill. 

First, the preemption of existing State laws will undesirably 

weaken, rather than strengthen, consumer protection. Right now, 

there are 20 State laws which provide the citizens of those States 

with protections against abusive demand letter practices. Some of 

these State laws provide protections beyond what the current 

TROL Act contemplates. That means that residents of those States 

would actually lose protections from abusive demand letters, the 

opposite result from what this bill intends to accomplish. 

And it is not just existing State protections that stand to be lost 

by preemption. The States have historically served as laboratories 

of policy experimentation, developing new and innovative solutions 

to a changing landscape of problems, creating a marketplace of 

ideas from which Congress may draw. Preemption could cut that 

off, and that is not what we want. The TROL Act should be a floor, 

40 

not a ceiling, for consumer protection, allowing States to solve the 

problems of the future with new laws of the future. 

Second, the affirmative defense provision is simply too broad. 

Read literally, it immunizes any demand letter sender who issues 

a few legitimate letters that comply with the bill. Clever schemers 

could easily use this by sending a mix of legitimate and abusive letters or sending letters with deceptions different from the ones in 

the bill, thus harming consumers while still following the letter of 

the law. The affirmative defense should be removed or tightened to 

avoid these sorts of loopholes. 

Third, the bill identifies 17 specific acts that could be considered 

unfair or deceptive practices, but demand letters can be unfair or 

deceptive in far more than 17 ways. The State laws alone identify 

several others, and who knows what other deceptions will be invented in the future. So the bill should include a catchall provision 

to protect consumers from bad practices beyond the 17 listed in the 

bill. 

Fourth, the bill only prohibits a, quote, ‘‘pattern or practice’’ of 

sending improper demand letters in, quote, ‘‘bad faith.’’ These two 

extra requirements only make it harder for enforcement officials to 

protect consumers. The requirements are meant to protect legitimate patent asserters who make innocent mistakes, but that would 

be better done with something like the bona fide mistake provision 

in the FDCPA, not by these two requirements. 

We ask the subcommittee to incorporate these suggestions into 

the draft bill, and we continue to support the subcommittee’s efforts here. Certainly, the TROL Act is no substitute for broader 

patent reform, such as H.R. 9. No demand letter can block and stop 

abusive litigation. Still, the demand letter piece of the patent reform puzzle is critical, as it affects the smallest businesses and the 

weakest consumers, ones that this subcommittee should be proud 

to protect. 

Thank you again for inviting me to testify. I look forward to your 

questions. 

[The prepared statement of Mr. Duan follows:] 

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Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

I think that concludes all of our witness statements, and we will 

move into the Q&A part of the hearing. And I will recognize myself 

for 5 minutes for questions. 

And I want to ask a question of the entire panel, and I would 

like for each of you to answer. 

It seems like over the past year we have heard a lot of different 

stories about various patent assertion entities that have targeted 

a wide variety of industries. Would each of you describe the trajectory of this problem? And then, in particular, I am interested in 

your opinion, is the problem getting worse or getting better? 

Mr. Long, let’s start with you. 

Mr. LONG. Thank you, Chairman Burgess. 

I think the trajectory is actually going down. When you look at— 

some of the biggest concerns was this MPHJ, or what some people 

called the patent scanner troll. And the FTC stepped in in that 

case, and they entered a consent order. I believe that was finalized 

just a few months ago. 

You look at the Innovatio case; it has been a poster child for patent abuse, so to speak. It concerned someone sending letters to 

mom-and-pop coffee shops, to hotels about their WiFi. And we see 

that case was handled, and very appropriately, by Judge 

Holderman in the Northern District of Illinois, and it actually has 

reached, I think, a settlement on all those issues. 

So I think, as the public becomes more informed of what is going 

on, given all the resources that we have on the Internet and even 

at the Patent Office to investigate someone you receive a letter 

from, I think things are going much better. 

Mr. BURGESS. Thank you. 

Mr. Dolin, your comments on the trajectory of the problem? Better or worse? 

Mr. DOLIN. Thank you, Mr. Chairman. 

I would like to answer your question by pointing out that one 

person’s patent troll is another person’s innovator. 

Certainly, I am not here to dispute that there are bad actors in 

the system, just like there are bad actors in any system, just like 

there are bad actors in medical malpractice litigation or any other 

civil litigation. So I certainly agree that there are actors who deform the system, and those should be dealt with. 

But nonpracticing entities and patent distortion entities include 

our universities, who develop cutting-edge technologies. They include companies that allow people to invest money in innovation 

and essentially provide funds to small inventors. 

So, on one hand, certainly there are these mom-and-pop shops 

that are faced with bad-faith demand letters, and those should be 

protected. But let’s not forget that on the other side there are 

equally small mom-and-pop-shop innovators who come up with new 

research and technology that ultimately is used to develop new cell 

phones, new medications, new machinery that actually makes our 

lives so much better. 

So I think the problem is there, but the problem is I don’t think 

as bad as has been portrayed. And I think that problems, just like 

many problems, have—that coin has two sides. 

63 

Mr. BURGESS. Thank you. 

Ms. Lettelleir? 

Ms. LETTELLEIR. Thank you, Chairman. 

We see a continued and steady stream of demand letters being 

received by the members of United for Patent Reform. I can speak 

from personal experience that at J.C. Penney, for example, we have 

received three in just the last 45 days, one of which was not even 

more than 200 words in length. 

So it is a continual problem that our membership is facing. And 

I think it is important to note that the United for Patent Reform 

includes in its members companies like Oracle, like Bell, Samsung, 

huge owners of patent rights who are very interested in preserving 

the right to innovate and the right to protect those innovations, 

and yet they support the changes we are suggesting to this legislation. And that is because they are also targeted by demand letters; 

they see their customers targeted by demand letters. It is really 

only an issue of scale in terms of how much is demanded in these 

letters. 

And while it is a huge problem for the smaller members of our 

constituency in United for Patent Reform, those small members are 

customers of our larger members. And, also, J.C. Penney is a consumer, for example, of small innovative businesses. When a small 

innovator receives a demand letter, I have to be concerned, as 

counsel for a major company that is considering using or adopting 

their innovation. The very fact that they have already been targeted by one or more trolls interferes in our ability to adopt their 

innovation, because it is now no longer a small transaction for J.C. 

Penney. We may be looking at a $100,000 contract with a small 

company to adopt their technology, but, suddenly, by adopting that 

technology, J.C. Penney is added to the target list of the trolls, and 

now I am looking at legal bills of $2 million and $3 million to defend against the troll. 

Mr. BURGESS. Thank you. 

Mr. Duan, do you have an observation? Getting better or getting 

worse? 

Mr. DUAN. Yes, you know, I think I will make just a couple quick 

points. 

The first point is, you know, I think that we have seen some data 

that shows that patent litigation continues to rise. There was a 

brief downtick, but, you know, that has not proved to be a longterm thing. 

The second thing I would point out is we should be worried about 

the future. Right? You know, a lot of the patents that we are talking about are related to, like, old software technologies on very 

broad concepts. But, you know, my organization works on a lot of 

future technologies. We are doing this great event on 3D printing 

in the next few weeks, which I would encourage you all to attend. 

But one of the things that I worry about whenever I see some 

of these new technologies is, are we just opening up a door to the 

next wave of patent trolls? Are we just opening up the door to a 

whole range of patents on 3D printing that will ultimately stifle a 

growing industry? 

And so, you know, I think that the work that the subcommittee 

is doing in trying to deal with this problem initially will not only 

64 

fix a problem that is current but will also fix problems that will 

come down the road as new technologies arise. So I think that is 

a important thing to remember. 

Mr. BURGESS. The Chair thanks the gentleman, all members of 

the panel. 

Ms. Schakowsky, 5 minutes for your questions, please. 

Ms. SCHAKOWSKY. Thank you. 

Let me just say a few things, and then, Mr. Duan, I have some 

questions for you. 

Section 2(b) of the draft bill contains an affirmative defense that 

statements, representations, or omissions are not made in bad faith 

if the sender can prove that they were mistakes made in good faith. 

The draft bill text states that good faith made be demonstrated 

by, quote, ‘‘evidence that the sender, in the usual course of business, sends written communications that do not violate the provisions of this act.’’ But it also says that good faith may be demonstrated by, quote, ‘‘other evidence.’’ 

So, Mr. Duan, just to be clear, could this affirmative defense provision permit a bad actor to avoid liability simply because he did 

not have a history of sending deceptive letters, even though those 

other letters in consideration were not patent assertion letters? 

Mr. DUAN. Yes, I think that, you know, you are hitting the nail 

exactly on the head. The problem with the affirmative defense provision is that it provides just so many opportunities for finding 

loopholes to allow for somebody to send out abusive demand letters 

that just happen to comply with the particular provisions or that 

manage to convince a court that they comply with the specific provision of the law, even though they actually are abusing consumers. 

The two examples that I provided in my testimony were, first of 

all, you know, somebody could send out a number of legitimate letters possibly to just their friends and then send out abusive letters 

and thereby be able to show that they had a pattern or practice of 

sending out reasonable letters. Similarly, you know—— 

Ms. SCHAKOWSKY. So these letters don’t have to have anything 

to do with patents? 

Mr. DUAN. It doesn’t—— 

Ms. SCHAKOWSKY. The friendly letters. 

Mr. DUAN. Yes. I mean, it doesn’t seem like the provision would 

require that. 

And, similarly, the provision only requires that, in order to take 

advantage of the provision, one only has to send letters that comply 

with the specific requirements of the law. And the specific requirements of the law are those 17 requirements that I laid out. It says 

nothing about whether or not those letters are abusive or misleading or deceptive in any other way. 

And, you know, the State laws that I have looked through extensively give numerous other examples of ways in which demand letters could be misleading or deceptive. You know, they could demand an amount that is far beyond the reasonable licensing arrangement for the patents. North Carolina has a very interesting 

provision relating to threatening an injunction against someone 

when have you no right to obtain an injunction. 

65 

There are lots of different ways that a letter could be abusive 

that fall outside of the scope of what this bill provides, and that 

affirmative defense would effectively immunize those actions. 

Ms. SCHAKOWSKY. So do you agree that section 2(b), then, is not 

nearly specific enough? 

Mr. DUAN. Yes. 

Ms. SCHAKOWSKY. In your written testimony, you suggest borrowing language from the Fair Debt Collection Practices Act, which 

you used as a first example, which allows debt collectors to avoid 

liability if they can prove the violation was a bona fide mistake. 

Can you explain why you think this language is better than the 

affirmative defense currently in the draft bill? 

Mr. DUAN. Well, I think that the idea behind the bona fide mistake is that it actually captures the thing that we are try to protect. 

We are trying to protect the small inventor who, you know, 

maybe for some reason or other accidentally doesn’t comply with 

the law because, you know, they misread it or they failed to include 

a certain piece of information. And, you know, I don’t think that 

that sort of activity should be punished, as long as the person is 

reasonable about it, attempts to fix the problem, attempts to fix the 

problem within a reasonable amount of time. You know, that is not 

the kind of thing that we want to be punishing. 

But what we don’t want is a provision that, in order to keep that 

sort of case out of the courts, also keeps a whole bunch of other 

cases out of the courts, cases that ought to be there, cases that 

ought to be unfair and deceptive practices. 

And, you know, I think that the caselaw that I have seen on the 

FDCPA indicates that that provision has worked well in that context, and I think it can work well here. 

Ms. SCHAKOWSKY. Thank you. 

And I yield back. 

Mr. BURGESS. The gentlelady yields back. The Chair thanks the 

gentlelady. 

The Chair recognizes the vice chair of the subcommittee, Mr. 

Lance, for 5 minutes for your questions, please. 

Mr. LANCE. Thank you, Mr. Chairman. 

Mr. Long, I would like to get your thoughts on one possible alteration of the draft legislation. As you know, the draft bill prohibits 

patent owners from omitting certain information if the omission 

were made in bad faith. This bad-faith provision protects patent 

owners from an FTC enforcement action when their omission was 

a mistake. 

Critics of the text have said that it would be difficult for the FTC 

to enforce the provisions because it would be hard to prove bad 

faith. 

What if we made some changes to the bill to lower the FTC’s enforcement burden with respect to required disclosures? For example, could the enforcement bar be lowered in cases where a patent 

owner refuses to provide information a second time after the demand letter recipient requests that information? 

Mr. LONG. Thank you, Congressman Lance. 

So I am looking at that provision. I recall reviewing information 

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66 

vision, about an issue of did you omit some detail that the act had 

asked for, it is my understanding they thought that omitting that 

information, actually, in the normal course, wouldn’t be harmful 

and wouldn’t do any arm. 

And so their concern was actually, well, if omitting it doesn’t do 

any harm and you require a bad-faith omission, what good does 

that provision do? And it is because of the concern that omitting 

that information may not necessarily harm somebody that you 

have that extra protection for the bad faith if something was omitted. 

I think, otherwise, when we talk about changing the burden if 

there is a second request, it is so circumstance-driven what that 

second request might be. I certainly don’t think you would want a 

bright-line rule in that regard. 

Often, the patent portfolios are at issue when you are talking 

about businesses sending letters to other businesses. They may 

have been very innovative in the particular space that their patents cover and have a lot of patents, so it may be that the second 

response may not be some of the requested information. It might 

be more, let’s figure out the most efficient way to see what information we need to do this, to reach a reasonable business decision. 

Thank you. 

Mr. LANCE. Thank you. 

Would anyone else on the panel like to comment? 

Ms. Lettelleir? 

Ms. LETTELLEIR. Yes, I am not sure I totally understand what is 

being proposed, but I think one of the things you have to keep in 

mind is much of what occurs with respect to these demand letters 

occurs under a veil of secrecy. 

What will happen typically is, after you receive the first demand 

letter, then when you request additional information, you will receive a typical response along the lines of, ‘‘We would be happy to 

share more information with you just as soon as you sign a nondisclosure agreement.’’ And that nondisclosure agreement is typically very far-reaching and prohibits you from discussing anything 

that is discussed with the patent troll with any third party, even 

your vendors, perhaps. 

And so I think that runs into some problems, because I can see 

a response being, ‘‘Well, we offered more information. We just 

asked them to sign a nondisclosure agreement, and they refused, 

so that is why we didn’t provide the information in response to the 

second request.’’ And I am not sure how the rubric that you are 

proposing would fit within the realities of what is happening with 

the patent trolls and their requirements for nondisclosure agreements. 

Mr. LANCE. Thank you. 

Mr. Dolin? 

Mr. DOLIN. If I may—— 

Mr. LANCE. Absolutely. 

Mr. DOLIN. Thank you, Congressman. 

I think I disagree with, sort of, the concern that was just raised, 

in part because nondisclosure agreements or filing under seal is so 

common in civil litigation. And so, again, to the extent that the patentee will have to jump through more hoops while sending a deVerDate Mar 15 2010 15:31 Aug 18, 2016 Jkt 037690 PO 00000 Frm 00070 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X32TROLACT\114X32TROLACTWORKING WAYNE
67 

mand letter which ultimately serves to amicably resolve any legal 

disputes—now, again, I want to emphasize that there are sometimes these bad actors who don’t have any legal basis for their 

claims and they are simply acting as extortion artists. 

But, plenty of times, these patentees have valid patents, and 

they seek to resolve their legal disputes without resorting to courts. 

And requiring them to provide more information under broader requirements than they would have to comply with in civil litigation 

seems to me to be somewhat counterproductive. 

It seems me to push those patentees towards the route of litigation, which is ultimately a defeat for consumers, defeat for patentees, and defeat at the end of the day for people who have to defend against these patents, because, as was mentioned, that would 

cost a couple of million dollars as opposed to settling it amicably. 

Mr. LANCE. Thank you. 

Mr. Duan? 

Mr. DUAN. I will just add a couple of words. 

You know, I think that, certainly, if somebody accidently omits 

some information that is required and is requested to provide it 

and they provide it, you know, I think that is what ordinarily happens in any sort of situation, not just the patent demand letter situation. If somebody makes a small technical error, then, you know, 

they fix it. 

I think the more important point, though, is that, you know, 

these aren’t terribly hard requirements to comply with. They are 

fairly simple pieces of information that are being requested. They 

are information that ought to be in the hands of the asserter of the 

patent if they are to make a legitimate assertion in the first place. 

So it should be a fairly simple thing to comply with, and, you 

know, if they happen to do it in two letters because of an unintentional omission, you know, I think that is reasonable. 

Mr. LANCE. Thank you very much. 

And, Mr. Chairman, I yield back 19 seconds. 

Mr. BURGESS. The gentleman yields back. The Chair thanks the 

gentleman. 

The Chair recognizes the gentlelady from New York, Ms. Clarke, 

for 5 minutes for your questions, please. 

Ms. CLARKE. I thank you, Mr. Chairman. And I thank our ranking member. I thank our panelists for sharing the information with 

us today. 

In addition to preempting more consumer-protective State laws, the draft bill contains a $5 million cap on civil penalties that can 

be collected by State attorneys general for section 2 violations. 

Mr. Duan, let’s imagine a recipient of an abusive demand letter suffers damages in excess of $5 million. In this case, what good is 

the cap on civil penalties? 

Mr. DUAN. It certainly is problematic, and I thank you for the 

question. 

You know, I think that the problem is that it is very hard to tell 

right now what the problems of the future will look like. It is entirely possible that, you know, someone will come up with some 

sort of very expensive type of demand. And, as a result, I think 

that, you know, tying the hands the State attorneys general 

through the civil cap penalty or through some of the other sorts of 

68 

means that are in this bill would be substantially problematic to 

full enforcement. 

Now, I know that the FTC has enforcement capabilities, as well. 

But the FTC is a single agency, and, you know, it only has so much 

capacity. So we need to rely on other parties to fully enforce these 

sorts of issues, particularly when it comes to some of the smaller 

patent assertion entities, you know, who possibly will fly under the 

radar of Federal authorities. 

As a result, I think that we want to avoid tying the hands of 

State attorneys general in being able to protect the consumers in 

the individual States. You know, consumer protection has been 

long the province of the States, and I don’t see why that should be 

any different here. 

Ms. CLARKE. On the note of the FTC, it is a relatively small 

agency and has limited resources, so State enforcement is crucial 

and complementary to the FTC’s efforts to protect consumers. 

Under its current budget, how large of a role do you think the 

Commission could reasonably play in combating abusive demand 

letters? 

Mr. DUAN. So I personally don’t know the budget of the FTC. I 

unfortunately did not read that—— 

Ms. CLARKE. OK. 

Mr. DUAN [continuing]. In the many volumes of texts that I have 

read in preparation for this hearing. 

Ms. CLARKE. Sure. Sure. 

Mr. DUAN. But what I will point out is, you know, the FTC 

should be applauded for their settlement with MPHJ. They spent 

a lot of time working on that, and I think it was an important settlement. But that is one settlement in however many years they 

have been looking at this. That, I think, is indicative of what their 

resources are capable of. 

And I think the fact that MPHJ is probably the biggest and most 

notorious of the patent trolls out there really shows that that is 

what the FTC is going to be able to look at. They are not going to 

be able to go after, you know, the smaller patent troll who goes 

after restaurants or who goes after, you know, retail shops. They 

are going to look for the bigger ones. 

And that is why I think we need to have State attorneys general 

who are able to, you know, be on the ground, take care of the individual problems that are harming the consumers of their respective 

States. 

Ms. CLARKE. So, much of the enforcement action against the 

senders of abusive demand letters has occurred at the State level. 

How important is it to preserve the ability of State attorneys general to continue their enforcement efforts? 

Mr. DUAN. Well, I think that, you know, the past enforcement actions are indicative of how much they really care about this issue. 

You know, we have had the Vermont’s State attorney general testify, I think, before this committee. I think we have had the attorney general from Nebraska also testify on this issue. Both of them 

have indicated that they are very, very interested and very, very 

concerned for their consumers. And, you know, I think that that 

level of enthusiasm to protect the consumer interest demonstrates 

69 

that they are a valuable resource in dealing with this consumer 

protection problem. 

Ms. CLARKE. The remedies available to State attorneys general 

under this bill are more limited. How would that effect the continued enforcement by State attorneys general? 

Mr. DUAN. Well, you know, again, I think that anytime that you 

are tying the hands of State attorneys general, it makes it much 

more difficult for them to be able to protect their consumers. You 

know, if they start having to prove additional factors, such as, you 

know, the bad faith or a pattern or practice, you know, I think that 

will make them less inclined to deal with this issue, which would 

really be an unfortunate thing for the small businesses and consumers who are receiving these demand letters. 

Ms. CLARKE. Very well. I appreciate your response. 

And I yield back the balance of my time, Mr. Chairman. 

Mr. BURGESS. The Chair recognizes the gentlelady. The 

gentlelady yields back. 

The Chair recognizes the gentlelady from Indiana, Ms. Brooks, 

for 5 minutes for your questions, please. 

Mrs. BROOKS. Thank you, Mr. Chairman. 

And I learned in preparation for this hearing that, in Indiana, 

currently, State lawmakers are currently working on legislation to 

prohibit a person from asserting a bad-faith claim of patent infringement. 

And, while the legislation is still being perfected, I would sense 

that there is probably some disagreement in the panel regarding 

bad faith. And I apologize that I was not here at the beginning of 

the testimony and so forth but would like to dig in a little bit with 

respect to bad faith. And I would like to hear again from each of 

you what your views are with respect to the use of bad faith in this 

legislation. 

Mr. Duan, would you please share with us what your thoughts 

are as to whether or not it should be included at all? I heard from 

Ms. Lettelleir that she would not like it included, I believe, and it 

should be removed. 

And so I would like—‘‘bad faith,’’ and then I would also like to 

move to a question with respect to the term ‘‘pattern and practice’’ 

and what we should do with respect to that term. 

Mr. DUAN. Thank you. That is an excellent question. 

You know, I think our position is that we think that the badfaith element is not required and basically only adds to the burden 

of enforcement officials, who will have to somehow prove the mental state of the person who was sending a letter in order to prove 

their case. 

That it is not required, you know, I think as demonstrated by the 

Fair Debt Collection Practices Act. There have been a number of 

challenges under Noerr-Pennington saying that, you know, the requirements that debt collectors only call between certain hours and 

include certain disclosures in their debt collection notices, there 

have been challenges to that, saying that these are unconstitutional impingements upon the right to petition. The Sixth Circuit 

has in no uncertain terms said that that is not the case. 

The cases that are relied on in the patent context to suggest that 

that is not the case are fairly unreliable. I think that they have 

70 

been overruled, to a certain extent, by the Supreme Court. So, you 

know, I don’t think that those arguments hold up anymore. 

That it is bad for the overall system, you know, I think is demonstrated by the fact that the FTC currently doesn’t require any 

sort of bad faith in order obtain just injunctive relief. And that 

makes sense. The idea is that, if the FTC sees somebody who is 

sending out demand letters that are improper just on the basis of 

the letter, they should be able to tell them, ‘‘Stop doing that. We 

can get an injunction against you from doing that. We don’t have 

to prove your mental faith in order to keep you from deceiving consumers.’’ So I think that that is an important point for why it 

would be problematic. 

Did you want me to answer the ‘‘pattern or practice’’ right now? 

Mrs. BROOKS. Certainly. Go ahead. 

Mr. DUAN. So, you know, I think that the pattern or practice is 

additionally problematic. Again, it adds to the enforcement burden. 

The real problem is that, as was discussed previously, a lot of 

these demand letters go unnoticed. They fly under the radar because they are sent privately. So, you know, if I receive a demand 

letter and I go to my State attorneys general or I go to the FTC 

and say, hey, you know, I need you to look into these guys, they 

are going to have to find somebody else who received a letter. And 

who knows where they are going to find that, right? Because there 

is no registry of these letters. They are not going to be able to identify it, so they won’t be able to bring the case. 

And that is going to be a real problem for enforcement just as 

a practical matter. Because of the fact that these are private, it 

won’t be possible all the time to find multiple letters, and, as a result, it won’t be possible to protect consumers in the way that is 

necessary. 

Mrs. BROOKS. Who else would like to—Ms. Lettelleir? And I 

would also like you to, if you could, list some of the factors that 

you think should be included in order to remove affirmative defense language from the text. 

You mentioned that you thought there could be a list of factors. 

So I am sorry, I jumped to a different question, but you mentioned 

that you thought it could include a list of factors to show that the 

sender didn’t act in bad faith. And what are some of those factors 

you would like included in order to remove the affirmative defense 

language? 

Ms. LETTELLEIR. I don’t think we have, at this point, proposed 

specific factors, but—— 

Mrs. BROOKS. OK. 

Ms. LETTELLEIR [continuing]. I think there is a logical way that 

that could be viewed, in terms of, for example, if letters have been 

sent in which they have only omitted one of the required disclosures and they can show that they had other letters in which that 

one particular one was not omitted, for example. 

And I think as a practical matter that, before a letter is going 

to bubble to the surface and to the attention of the FTC or an enforcement agency, it is going to be one of those in which it is wholly 

uncompliant with the act. There are going to be substantial issues 

with the letter. And I think you can account for how close do they 

come, you know, and what they are able to articulate about why 

71 

it was omitted. Because, in some instances, perhaps in their view 

it didn’t apply for some reason. That might be—if they can articulate a reason that a particular disclosure they did not feel was appropriate for that particular demand for some reason. It is hard for 

me to imagine that scenario, because, you know, what is required 

to be disclosed is very rudimentary, really. It is not a burdensome 

thing to disclose. 

So I think that there is a lot of flexibility in terms of what those 

could be and are really going to be commonsense factors about 

what would be omitted and why it was omitted. 

Mrs. BROOKS. Thank you all for sharing. My time is up. 

I yield back. Thank you. 

Mr. BURGESS. The gentlelady yields back. The Chair thanks the 

gentlelady. 

The Chair recognizes the gentleman from California, Mr. 

Ca ́ rdenas, for 5 minutes for your questions, please. 

Mr. CA ́ RDENAS. Thank you very much, Mr. Chairman. 

I appreciate all the witnesses being here today to help enlighten 

us on what is going on out there in the real world. 

I just want to point out that the targets of patent demand letters 

are often small businesses and that do not necessarily have a large 

legal team at their disposal, especially a legal team equipped to 

handle patent matters. 

As we have heard so many times from the owners of these small 

businesses, the high cost of dealing with abusive patent demand 

letters do significant harm to their business and their livelihood 

and, in some cases, cripple that small business or even end that 

small business, and there go jobs. 

The targets of these unfair and deceptive demand letters have 

explained that the letters they receive rarely contain enough information for them to evaluate the allegations of infringement or the 

demands for compensation without the help of a patent lawyer. 

And when targets consult lawyers, the lawyers must spend a significant amount of time, energy, and money to conduct an investigation of the claims made in these letters, which costs targets extraordinarily high to these small businesses when it comes to legal 

fees and other matters. 

The draft bill attempts to address that lack of detail in a demand 

letter through section 2(a)(3), which requires certain information be 

included in the demand letters. 

Mr. Duan, do you think the five elements required in this section 

would create enough transparency and allow the average recipient 

of these misleading leaders to avoid costly patent lawyer fees? 

Mr. DUAN. Thank you for the question. I think that it is an excellent question. 

I think that they are an important start. The elements that are 

listed there are probably some of the most critical elements—you 

know, the identification of the patents, identification of the person 

who asserts the right. You know, those are definitely the most critical pieces that would enable somebody to, you know, look at this 

and really figure out what is going on here. 

I think that the requirements for explaining the basis of the infringement allegations could be strengthened. Right now, some of 

those are in there, but they do not include a requirement, for examVerDate Mar 15 2010 15:31 Aug 18, 2016 Jkt 037690 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X32TROLACT\114X32TROLACTWORKING WAYNE
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ple, for identifying particular claims. They sometimes allow for exceptions in situations where—they allow for certain exceptions, in 

which somebody might be able to avoid having to disclose that sort 

of information. 

Excuse me. I have a bit of a cold. 

Anytime that you send out a demand letter, at least if you are 

sending it legitimately—you know, I did this when I was practicing 

as a patent attorney—you do the investigation. You know what the 

basis is for the infringements. You have investigated the products, 

you have investigated the patent, you understand what is going on. 

You wouldn’t send out the letter, as a matter of legal ethics, if that 

weren’t the case. And that is what legitimate people do. 

All that is being asked here is to put that into the record so that 

the person has a fair shot at understanding what is going on. That 

is what is being asked here. 

Mr. CA ́ RDENAS. Thank you. 

The first requirement of this section is that the sender of a patent demand letter include the identity of the person asserting the 

right to license the patent to or enforce the patent against the recipient. That language may only require disclosure of the identity 

of the person sending the letters and not, for example, the identity 

of the parent company. 

Mr. Duan, do you think that this section needs further clarification so that recipients and State attorneys general and the FTC 

know exactly who is behind the patent demand letter? 

Mr. DUAN. Certainly. I think that, you know, identification of the 

real party in interest can be very important in a lot of situations. 

You know, I think that there are some examples—particular examples aren’t coming to mind, but I think there are situations 

where, for example, the person who is receiving the letter might 

have already taken a license, or somebody upstream might have already taken a license, and knowing the real party in interest could 

reveal that information and, you know, allow them to simply dismiss the letter, saying, you know, I already have a license to this. 

In other cases, for example, with MPHJ, the center of the letters 

uses a bunch of shell companies, which makes it hard at the beginning to figure out that all of these demand letters are coming from 

the same place. So disclosure of the real party in interest could 

allow for that to happen, which would allow for the State attorney 

general to identify a pattern or practice if that element is left in. 

So, you know, I think that that element is fairly critical in a lot 

of situations to proper enforcement. 

Mr. CA ́ RDENAS. OK. Thank you. 

Ms. Lettelleir—I am sorry if I butchered your name—J.C. 

Penney is not a small company. Thank you so much for coming forward and testifying today. But what elements do you think that 

J.C. Penney, for example, sees in that section that could be improved? 

Ms. LETTELLEIR. Well, we would like to see a specific identification of the claim in the patent that they are asserting as being infringed. We think that is very fundamental to understanding what 

is being asserted against you and is fundamental to any business 

being able to make an informed decision about how to respond to 

the letter. 

73 

And to your point in terms of, you know, the need for legal counsel—and while I am here and I work for J.C. Penney, I am representing the United for Patent Reform that has many members 

that are very small and do not have on-staff patent attorneys at 

their disposal to advise them. One of the things that is very important in terms of disclosure of the real party in interest and the 

claims that are specifically being infringed is it does help a smallbusiness owner identify what company they may have acquired 

product from that is in fact the source of the accused infringement. 

And many times it is very difficult to sift through and understand what is even being accused. And if you don’t understand 

what is being accused, a business owner has no chance of properly 

identifying and then communicating with the vendor that may 

have sold them the product. 

And we have experienced firsthand an incident where we received a demand on a product that we acquired from Adobe, and, 

once we figured it out after an extensive amount of work, Adobe 

had already taken a license to those patents and had sought to protect their customers as part of that license. 

So getting to who is taking the action, who owns the rights, and 

what exactly you are being accused of is key for a small business 

to ever get to who is behind and who they should be looking to for 

assistance. 

Mr. CA ́ RDENAS. Thank you. 

Thank you, Mr. Chairman. Yield back. 

Mr. BURGESS. The gentleman’s time has expired. 

The Chair recognizes the gentleman from Kentucky for 5 minutes for your questions, please. 

Mr. GUTHRIE. Thank you, Mr. Chairman. 

Sorry for bouncing in and out. We have a competing hearing 

going on right now in another subcommittee. 

So, Mr. Long, does the legislation preserve the FTC’s section 5 

authority? And could the FTC continue to bring actions against 

patent trolls for deceptive demand letters under section 5 authority 

if the bill were enacted? 

Mr. LONG. Yes. Thank you for your question. It absolutely does. 

It has a provision that says, nothing within this act is meant to 

keep the FTC from doing what it otherwise could do. So that certainly is a catchall that could catch some of these concerns people 

have that may not be delineated in the proposed act. 

Mr. GUTHRIE. Also for you, Mr. Long, could the State attorneys 

general continue to bring cases under their many FTC acts under 

the bill? 

Mr. LONG. And that is such a good question. I will have to say 

that is not clear to me. I haven’t looked at that issue, and so I 

would have to look more to see what the State attorney general is 

asked to do. 

But I know that an important part of this act and an important 

part of the compromise, given all the work that has been done to 

get us here, is that it does, indeed, allow the State attorney generals to use this act as a vehicle to address the concerns of their 

constituents when they face these issues. 

Mr. GUTHRIE. Could you submit an answer to that when you 

have the opportunity to review it to the level—I know you said you 

74 

didn’t have an opportunity to review to the level you want to to feel 

comfortable, so would you submit a written answer? 

Mr. LONG. Yes. 

Mr. GUTHRIE. We will make sure you get the question again. 

And, also, Mr. Long, the bad-faith standard—the bill also includes a bad-faith requirement. Why is ‘‘bad faith’’ necessary, and 

why is ‘‘bad faith’’ required by the First Amendment at all? 

Mr. LONG. Very good questions. There are two reasons. 

There is a practical reason why you want to have ‘‘bad faith’’ in 

what is going on here. There is a lot of—and, by and large, the 

bulk of patent demand letters are all legitimate demand letters. 

You want to have ‘‘bad faith’’ because you don’t want this to be a 

vehicle for a gotcha. A patent owner may have inadvertently for 

whatever reason sent something that fell short of the act, but there 

is no harm and there is no intent to get harm, so we want to have 

that ‘‘bad faith.’’ So I think that is a good practical issue to have. 

But, more importantly, and directly to your constitutional law 

question, it is indeed a constitutional First Amendment right, the 

right to petition the Government for redress. And that includes, for 

example, cases, the right to go to the court and not be punished 

because you exercised the right to do what you should be allowed 

to do. 

Courts have universally applied that caselaw through patent demand letters. And so the exception, where the First Amendment 

right won’t protect you, is for what is called a sham litigation, 

where the reason you brought the case was not because you wanted 

the outcome of what the case would be, what the royalty would be 

that the jury would give you, but because of what would happen 

because you brought the process to begin with. 

For example, in terms of patent assertion entities, the concern is 

you brought the case not because you want the royalty that the 

court would give you but because you want that expense or that 

process to force whoever your target is to give you money that may 

not be warranted by your patent. And that requirement, that sham 

litigation aspect, can apply if what has been done has been done 

in bad faith. So it is an important First Amendment protection. 

Mr. GUTHRIE. Thank you. 

And I have one more for you, Mr. Long. What information is disclosed in professionally written demand letters? And is that information different from what is required in the TROL Act? And is 

the information requirement burdensome so as to cause an infringed party to file a suit to avoid writing a demand letter? 

Mr. LONG. A very good question. 

When I look at—and we are talking particularly about the things 

that are required to be disclosed—those are typical things you will 

find in a typical legitimate demand letter. You are identifying who 

has the right to the patent. You are identifying what the patent is. 

You are identifying perhaps a claim that you think that person 

may be practicing. You identify what particular product they may 

be using. And you describe in the level of detail that is needed in 

that first instance, why you think they infringed. Those are typical 

things that are not too onerous. 

The problem comes particularly in what you would require someone to reasonably disclose, because there are all kinds of cirVerDate Mar 15 2010 15:31 Aug 18, 2016 Jkt 037690 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 F:\114THCONGRESS\114X32TROLACT\114X32TROLACTWORKING WAYNE
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cumstances. For example, if you have a large portfolio of patents, 

you are not going to disclose every claim in every part of those patents that you think are infringed. It may not be worth that. Often 

the parties will agree, let’s select a representative set of your patents to talk about. 

And another issue is that often you may not know why they infringe. All the information you could find seems to indicate they 

may be using your invention, but the heart of their product that 

you think may use your invention could be in a microchip that you 

don’t have access to or in source code and you don’t know how it 

is written. And so that provision there varies, as far as showing 

and explaining why there is infringement, varies significantly from 

circumstance to circumstance. 

Mr. GUTHRIE. Thank you, Mr. Long. 

My time has expired, and I yield back. 

Mr. BURGESS. The gentleman’s time has expired. The gentleman 

yields back. The Chair thanks the gentleman. 

Seeing no further questions—— 

Ms. SCHAKOWSKY. Mr. Chairman, can I just submit for the record 

my opening statement and four letters from State attorneys general? 

Mr. BURGESS. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

Mr. BURGESS. If there are no further Members wishing to ask 

questions, I would like to thank the witnesses and the Members for 

their preparation and their participation in today’s hearing. 

Before we conclude, I would like to include the following documents to be submitted for the record by unanimous consent: a letter from the National Association of Convenience Stores; a statement for the record on behalf of the American Hotel and Lodging 

Association; a joint letter on behalf of the American Bankers Association, the Clearinghouse Payments Company, the Credit Union 

National Association, Financial Services Roundtable, Independent 

Community Bankers of America, and the National Association of 

Federal Credit Unions. 

[The information appears at the conclusion of the hearing.] 

Mr. BURGESS. Pursuant to committee rules, I remind Members 

they have 10 business days to submit additional questions for the 

record. 

And I ask the witnesses to submit their responses within 10 

business days upon receipt of the questions. 

Without objection, the subcommittee is adjourned. 

[Whereupon, at 1:02 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. JANICE D. SCHAKOWSKY

Thank you, Mr. Chairman, for holding this legislative hearing on the TROL Act. 

Patent Assertion Entities, also known as patent trolls, pose a serious threat to 

consumers and businesses all across the country. They send vague and threatening 

letters to businesses and end users around the country—extracting settlements in 

the thousands of dollars from businesses that can’t afford to go to court. 

It costs patent trolls virtually nothing to send patent demand letters, but they 

have cost American businesses tens of billions of dollars in recent years. 

76 

I am interested in finding a solution to this problem that protects businesses and 

consumers against patent trolls. That solution must also recognize the legitimate 

rights of patent holders to protect their ideas and technology. 

I appreciate this bill’s attempt to balance those two priorities—it is not easy work. 

Unfortunately, this bill misses the mark. 

This bill requires the FTC to prove ‘‘bad faith’’ of the sender in order for patent 

demand letters to be considered an unfair or deceptive act or practice. In short, this 

means that the FTC has to be able to prove that the sender of a patent demand 

letter knowingly made false statements or was aware that the recipient would be 

deceived. That is an incredibly high burden of proof—and its unenforceability would 

prevent action against trolls. 

This bill’s affirmative defense clause is also a major issue. Under this bill, the 

sender of patent demand letters can avoid FTC action if they can demonstrate that 

they in the usual course of business sends written communications that do not violate this Act.’’ That’s crazy. What it means is that if you communicate—as all of 

us do—on a regular basis without sending patent demand letters, you can troll as 

much as you like. 

Not to be a broken record for those that watched the full committee markup yesterday, but I have serious concerns about this bill’s preemption of State laws. 20 

States—including my home State of Illinois—have already enacted specific policies 

to curb trolling. In many ways, these State protections exceed those that would be 

guaranteed under the TROL Act. We should not preempt State law with this bill 

that does nothing to address the problem of patent trolls. 

I look forward to hearing the perspectives of our witnesses on these and other 

issues today, and to working to improve this legislation before it is marked up. I 

yield back. 

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