House Passes Patent-Reform Bill

December 5, 2013

The House of Representatives passed legislation to address the problem of abusive patent-infringement demands. The Innovation Act of 2013 (H.R. 3309), which passed by a vote of 321-95 includes provisions that would make it easier for community banks and other small businesses to challenge the validity of frivolous patent claims.

This legislation would help address the growth of patent-assertion entities (PAEs), which attempt to win legal settlements by claiming infringement of poor-quality business-method patents by legitimate businesses, including many community banks.

Components of the H.R. 3309 would help alter the business model of these entities by removing some of their financial incentive to assert patents of dubious quality in the hope of quick settlements. The legislation includes a provision that would allow the director of the Patent and Trademark Office to waive the costly filing fee required to initiate a transitional proceeding at the PTO that re-examines the validity of these patents. Absent a waiver, it would be cost-prohibitive for community banks to petition the PTO.