Senate Panel Passes Patent Reform Bill

By a bipartisan 16-4 vote, the Senate Judiciary Committee today approved the PATENT Act (S. 1137), which would seek to reduce abuse of the patent system through vaguely worded demand letters sent to businesses by patent trolls. The bill would include ABA-backed requirements for demand letters to provide more details about the patent and the entity asserting it.

ABA commended the provision in advance of the vote yesterday. “Without this information, financial institutions and especially smaller banks and credit unions have no way to effectively evaluate the merits of the demand letter,” ABA and several other financial trade groups said. “The reforms included in S. 1137 would significantly curb vague and deceptively-worded demand letters. It is critical that this provision stay intact and perhaps even be strengthened as the legislative process moves forward.”

The groups also urged senators to include a provision extending the Covered Business Method program, which protects the rights of legitimate patent holders while providing an efficient alternative to patent litigation over questionable patents.

Yesterday’s vote is an important first step in getting effective patent reforms enacted, and similar legislation is expected soon from the House Judiciary Committee. ABA attributed the success of the legislation in part to grassroots advocacy by state associations and ABA member banks.