House and Senate Bills to Curb Patent “Trolls” Include AICPA Recommendations

January 30, 2014

Legislation passed in the House (H.R. 3309) and introduced in the Senate (S. 1720) take aim at so-called patent “trolls” or “patent assertion entities” (PAEs), which purchase patents for the express purpose of filing patent infringement lawsuits against companies to get licensing fees or a legal settlement without actually making any goods or providing any services.

CPA firms and state CPA societies are among the many small- and medium-sized businesses that have been targeted by PAEs.  The American Institute of CPAs (AICPA) submitted written testimony for recent hearings on H.R. 3309 and S. 1720 in support of the bills and has urged Congress to take swift action on patent troll reform.  Earlier this year, the AICPA developed guiding principles for patent troll reform and worked closely with and advised the House and Senate Judiciary Committees about these principles.  H.R. 3309 and S. 1720 include several of the AICPA’s recommendations.

Fast on the heels of the Innovation Act’s largely bipartisan passage in the House on December 5, 2013, Senate Judiciary Committee Chairman Pat Leahy (D-Vt.) held a hearing directed at patent abuse litigation, specifically on the provisions in his bill, S. 1720, the Patent Transparency and Improvements Act.  The December 17, 2013 hearing demonstrated the Senate’s commitment to a reform process that has gained attention rapidly on Capitol Hill. .  Leahy’s Patent Transparency and Improvements Act, coauthored by Sen. Mike Lee (R-Utah), is similar to – but more narrow than – House Judiciary Committee Chairman Bob Goodlatte’s (R-Va.) Innovation Act.

Patent reform is not likely to advance as quickly in the upper chamber as it did in the House. Chairman Leahy has announced that committee staff will host panel briefings for entities that have objections to the legislation during February.  The briefings will conclude by the end of February, and it is expected that the Senate will consider the bill at some point this spring.