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LES has sent Congress a position letters expressing concern with H.R. 9 (The Innovation Act)

Thursday, August 6, 2015  
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August 6, 2015

Speaker John A. Boehner
H-232 The Capitol
Washington, DC 20515

Minority Leader Nancy Pelosi
H-204 The Capitol
Washington, DC 20515

RE: H.R. 9 "the Innovation Act"

Dear Speaker Boehner and Minority Leader Pelosi:

The Licensing Executives Society (U.S.A. and Canada), Inc. ("LES") applauds your efforts in addressing bad faith patent litigation. We agree that corrective action is required; however, this is a particularly complicated and interdependent area of the law, carrying with it grave potential for profound unintended consequences. A cautious and judicious approach is needed. For this reason, LES urges you not to bring HR 9 "The Innovation Act" to the floor, and we oppose passage in its current form.

LES is a non-profit, non-partisan professional society of about 3,000 members who are bringing the fruits of innovation to market by facilitating the orderly exchange of intellectual property rights through license agreements. LES is the leading licensing organization in North America. Its members represent every industrial sector and a wide array of technological disciplines, from telecommunications to the life sciences. LES is actively engaged in education, public policy, and the sharing of best practices to promote the effective use of intellectual property to the ultimate benefit of society. LES is a member society of Licensing Executives Society International (LESI), a global society.

LES believes that H.R. 9 in its current form is not ready for passage. There are several provisions within the bill that will diminish innovation, and will be especially harmful to small businesses and individual inventors. LES believes that passage ofH.R. 9 will result in an erstwhile "law of unintended consequences."

Of special concern is the bill's imposition of presumptive, mandatory fee-shifting ('loser pays"). That provision would require courts to award attorney fees and costs to the prevailing party unless the patent owner can meet the burden of proving its case was reasonable according to standards that are ill-defined. The risk of such an award will have a chilling effect on the innovation economy as a whole, and especially individual inventors and start-up enterprises; and will discourage resort to judicial relief for even the most meritorious of cases.

H.R. 9 also seeks to chill litigation as an avenue for settling patent disputes by imposing "involuntary joinder" of all interested parties, exposing them to the fee-shifting provisions of loser-pays. That regime will subject third parties to fee awards for actions by plaintiffs over whom they might have no influence or control.

H.R. 9 heightens the pleading standards for patent cases beyond the "notice pleadings" required for other civil matters. H.R. 9 seemingly assumes that full information is available to patent plaintiffs in requiring patentees to identify how each asserted patent claim is infringed by each accused process, product, or device, all without benefit of discovery.

Broad input from the inventive community is needed. H.R. 9 in its current form would weaken patent property rights long-enjoyed in the United States for the betterment of the public since the very first Patent Act of 1790, and it would diminish the vital role that intellectual property rights play in job creation, business formation, and capital investment.

LES asks that you defer bringing H.R. 9 to the floor until its various provisions can be more carefully balanced to protect the salutary benefits that our patent system affords the public interest and the U.S. economy.

LES is eager to work with House members in crafting legislation that balances restrictions on litigation abuse against pro-growth protection of valid and enforceable property rights.

Respectfully submitted,

Bradley J. Olson
Vice-Chair, Public Policy Comiitee (Legislative Initiatives)
Licensing Executives Society (U.S.A. and Canada), Inc.

cc: Members of the U.S. House of Representatives

Download the letter here