WASHINGTON—Ahead of a Commerce, Manufacturing, and Trade Subcommittee hearing on Thursday, a group of financial trade associations, including CUNA and NAFCU, issued a joint statement calling for various legislative measures affecting patent trolls.

In the letter, the group called for provisions clarifying the Federal Trade Commission's (FTC) authority to fight against deceptive practices, while not affecting legitimate patent holders' rights to send demand letters or otherwise assert their patent rights. Also, if a demand letter does not contain specific information about the patent, the alleged infringement and who is asserting the patent, any civil action that is later brought by the troll would be dismissed.

The associations further urged that government limit the number of exceptions provided to patent trolls, such as through affirmative defenses to fraudulent behavior. Finally, if state law is pre-empted, they asserted, it is imperative that strong and enforceable national standards for demand letter transparency be put in place.

"We fully support your goal of developing legislation to tackle the scourge of bad faith patent demand letters," the letter read. "Financial institutions of every size have been targeted by Patent Assertion Entities (PAEs), often referred to as patent trolls, who in most cases assert patents of dubious quality through vaguely worded demand letters or intentionally vague complaints."

Patent trolls' recent focus on credit unions, community banks and other financial institutions threatens to pose additional, unwarranted costs on lenders and the communities they serve, the group warned.

"In our industry alone, there are hundreds of examples of a patent troll attempting to sell a product — the patent license — to a bank or credit union using tactics resembling fraud or extortion," the letter further stated.

The joint letter was addressed to congressman Michael C. Burgess (R-Tex. ), Chairman, Subcommittee on Commerce, Manufacturing and Trade; and congresswoman Jan Schakowsky (D-Ill.), Ranking Member, Subcommittee on Commerce, Manufacturing and Trade.

Aside from CUNA and NAFU, other signatories to the letter included the American Bankers Association, American Insurance Association, The Clearing House Payments Co., L.L.C., Financial Services Roundtable, Independent Community Bankers of America, and National Association of Mutual Insurance Companies.

Earlier this month, a group of congressmen comprising Bob Goodlatte (R-Va.), Peter DeFazio (D-Ore.), Darrell Issa (R-Calif.), Jerrold Nadler (D-N.Y.), Lamar Smith (R-Texas), Zoe Logren (D-Calif.), and Anna Eshoo (D-Calif.) introduced a bill, Innovation Act (H.R. 9), to deal with what they characterized as the "ever increasing problem" of abusive patent litigation.

"In recent years, we have seen an exponential increase in the use of weak or poorly granted patents by patent trolls to file numerous patent infringement lawsuits against American businesses with the hope of securing a quick payday," Goodlatte said in a statement. "American businesses small and large are being forced to spend valuable resources on litigation rather than on innovating and growing their businesses."

Goodlatte added that with current patent laws "being abused in ways that are threatening the survival of American innovation, the Congress must act to curb abusive patent litigation."

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