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House subcommittee studies patent abuses
WASHINGTON (5/23/14)--The Federal Trade Commission (FTC), one of eight witnesses called to testify Thursday before a House Energy and Commerce subcommittee, raised issues on patent demand letters, patent assertion entities (PAEs) and other consumer protection issues.

Lois Greisman, associate director of the FTC's Division of Marketing Practices, presented testimony that patent demand letters raise broad issues about patents in the United States.

The Credit Union National Association has urged lawmakers to act to curb the patent system abuses, saying reforms are desperately needed. CUNA and the state credit union leagues have been active on every level urging lawmakers and the Obama administration address patent reform.

During Thursday's testimony before the commerce, manufacturing and trade subcommittee, Greisman said, "The commission shares this subcommittee's goal of stopping deceptive patent demand letters while respecting the rights of patent holders to assert legitimate claims, and recognizes that achieving this goal is not easy."

The testimony also included comments on a draft bill that would prohibit deceptive patent demand letters, which would grant the FTC civil penalty authority in this area. The testimony also noted that the FTC is pleased that the proposed legislation would supplement, rather than replace, their existing authority under Section Five of the FTC Act.

When it comes to PAEs, otherwise known as patent "trolls," the testimony cited a study from the Executive Office of the President that found that suits brought by PAEs have increased to 62% of all infringement suits from 29% two years ago, and that this may have "a negative impact on innovation and economic growth."

The FTC is currently conducting a study to shed further light on practices of PAEs beyond litigation, to include an assessment of how PAE activity affects competition and innovation.

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