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LES has sent Congress position letter expressing concerns with S. 1137 (The PATENT Act)

Thursday, August 6, 2015  
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August 6, 2015

Senator Mitch McConnell
317 Russell Senate Office Building
2 Constitution Ave
NE Washington, DC 20510

Senator Harry Reid
522 Hart Senate Office Building
Washington, DC 20510

Dear Majority Leader McConnell and Minority Leader Reid:

The Licensing Executives Society (U.S.A. and Canada), Inc. ("LES") applauds your efforts in addressing litigation abuse in patent cases. This is a complicated and multi-faceted area oflaw that is rapidly changing, and requires a nuanced and cautious approach. For this reason, LES urges you to defer floor consideration ofS. 1137, the "PATENT Act."

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 sharing best practices to promote the effective use of intellectual property to the ultimate benefit of society. LES is a member society of the Licensing Executives Society International (LESI), a global society of 32 sister societies and over 11,000 members.

The PATENT Act reflects certain laudable goals in attacking bad faith patent litigation. However, it is the considered opinion of LES that it is not ready for floor consideration, and less so passage. The bill includes provisions that will substantially increase the risk and raise the cost of enforcing all patents, even in the most meritorious of cases. This will diminish the value of innovation, increase the loss of intellectual property to foreign competitors, and deprive society at large of the fruits of American innovation. Moreover, it will diminish a Constitutionally-created property right that has contributed substantially to American exceptionalism and its robust free market.

The PATENT Act will be especially harmful to individual inventors, start-ups, and smaller corporate entities striving to survive in an increasingly competitive marketplace. They require the effective redress of the courts to level the playing field. However, as it stands, the PA TENT Act imposes great risk on all patent owners, e.g., mandatory fee-shifting. Under that proposed regime, and unlike any other U.S. property right, the "loser" would be obligated to pay the attorney fees of the prevailing party based on an as yet undefined "objectively reasonable standard." That provision will deny access to the courts to countless small businesses and inventors by virtue of the chilling effect worked by that increased risk alone.

Further, the intellectual property legal landscape has recently undergone dramatic change. The Supreme Court has substantially relaxed the standard by which attorney fees may be assessed, and narrowed what constitutes patentable subject matter. The entire innovation economy deserves time to weigh those legal developments, and to see how the lower courts will implement them.

LES urges a judicious approach that affords broad input from all members of the innovation economy, both large and small. In its current form, the PATENT Act would weaken property rights long-enjoyed in the United States, and long since recognized as a benefit to the public weal since the first Patent Act of 1790. Moreover, it would diminish the economic value of intellectual property, and discourage small business formation and capital investment. LES asks that you defer bringing S. 1137 to the floor until the legal landscape is more settled, and the various provisions of the bill are more carefully constructed and broadly considered.

LES welcomes the opportunity to work with you to develop a balanced bill that serves the entire innovation economy, the free market, and society as a whole.

Respectfully submitted,
Bradley Olson

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. Senate

Download the letter here