Paul Gugliuzza Testifies Before House of Representatives Subcommittee About Patent Reform

The professor of intellectual property law offered his expertise on patent demand letters.

Associate Professor of Law Paul Gugliuzza was called to testify before the House of Representatives Committee on Energy and Commerce’s Subcommittee on Commerce, Manufacturing, and Trade on Thursday, February 26, 2015.

The hearing, chaired by Michael C. Burgess (R-TX), was entitled “Update: Patent Demand Letter Practices and Solutions.” The subcommittee heard testimony from “stakeholders and experts” regarding the widespread use of demand letters by non-practicing entities. These entities—better known as patent trolls—generate profits by enforcing patents and collecting licensing fees rather than manufacturing products or supplying services based on the patents.

Some patent trolls have been known to send letters to hundreds or thousands of small businesses at one time, accusing those businesses of patent infringement and demanding thousands of dollars in licensing fees. Businesses often give in, even when threats are vague and unsubstantiated, because patent litigation can be complicated and costly.

Professor Gugliuzza’s research focuses on patent law and patent litigation. His recent article, “Patent Trolls and Preemption,” forthcoming in the Virginia Law Review, examines state and federal measures to curb false or deceptive assertions of patent infringement. The article describes recent court decisions holding that the First Amendment protects patent holders’ enforcement activities. But Gugliuzza disagrees. “Extending First Amendment protection to deceptive patent demand letters is wrong as a matter of constitutional doctrine, misguided as a matter of policy, and inconsistent with a long history of courts enjoining unfair and deceptive acts of patent enforcement,” Gugliuzza says.

The America Invents Act, passed in September 2011, was the first major patent reform bill passed by Congress since 1952. However, many argue that the bill did not go far enough to curb patent abuse. “The problem of abusive demand letters continues to be a very costly and serious issue, especially for small businesses around the nation,” notes a statement from the subcommittee. “This Congress, the subcommittee will again seek to craft legislation that will protect consumers from these trolling schemes while preserving the ability of legitimate patent holders to fairly assert their rights in the usual course of business.”

In addition to addressing the problem of abusive demand letters, Congress is also considering broader reforms to the patent litigation process. One notable bill, the Innovation Act, would impose stringent pleading requirements on plaintiffs and create a presumption that the losing party in a patent case should pay the winner’s attorneys’ fees.

In another recent paper, “Patent Litigation Reform: The Courts, Congress, and the Federal Rules of Civil Procedure,” published by the Boston University Law Review, Gugliuzza surveys these attempts at reforming patent litigation and argues that they misguided. “The Innovation Act would mandate defendant-friendly changes in all types of patent cases, not just the weak cases filed by patent trolls that are spurring the cries for reform,” Gugliuzza says. “We need changes that focus on bad actors and frivolous cases. Otherwise, we risk devaluing patents as an incentive for innovation.”

View Professor Gugliuzza’s testimony below.