[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






          H.R. ___, 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



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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Chairman Emeritus                    Ranking Member
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
GREG WALDEN, Oregon                  GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                 Massachusetts
RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California
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

                                 _____

           Subcommittee on Commerce, Manufacturing, and Trade

                       MICHAEL C. BURGESS, Texas
                                 Chairman
                                     JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey              Ranking Member
  Vice Chairman                      YVETTE D. CLARKE, New York
MARSHA BLACKBURN, Tennessee          JOSEPH P. KENNEDY, III, 
GREGG HARPER, Mississippi                Massachusetts
BRETT GUTHRIE, Kentucky              TONY CARDENAS, California
PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas                  G.K. BUTTERFIELD, North Carolina
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
GUS M. BILIRAKIS, Florida            FRANK PALLONE, Jr., New Jersey (ex 
SUSAN W. BROOKS, Indiana                 officio)
MARKWAYNE MULLIN, Oklahoma
FRED UPTON, Michigan (ex officio)

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                             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. ___, 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
 
          H.R. ___, 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, 
Cardenas, 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 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.
    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 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.
    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 
research-and-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.
    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.
    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:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
    
   
    
    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 resolutions 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 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, 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.
    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 long-term 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 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.
    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 from the FTC staff last year, and, when they talked 
about this provision, 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 demand 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 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 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 
bad-faith 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 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 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. 
Cardenas, for 5 minutes for your questions, please.
    Mr. Cardenas. 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 example, 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. Cardenas. 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. Cardenas. 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.
    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 small-business 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. Cardenas. 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 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 
circumstances. 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.
    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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