Association urges Congress to extend CBM at U.S. Patent and Trade Office

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New York Credit Union Association President/CEO William J. Mellin wrote on Wednesday to members of the House Judiciary Committee, urging them to extend the covered business method patent program at the U.S. Patent and Trade Office. Mellin’s comments were addressed to Rep. Hakeem Jeffries (D-8) and committee Chairman Jerry Nadler (D-10).

The CBM expired in September, but Mellin called for an extension, noting that “an additional six months would provide additional time to flush out remaining CBM patents of questionable legality and give Congress more time to consider far reaching changes to the patent system.”

For more than two decades, credit unions have been subject to abusive patent litigation and disingenuous license fee demands by non-practicing entities – often called patent trolls. When Congress considered the America Invents Act, Mellin explained, credit unions supported the bill in part because Section 18 included provisions that authorized the CBM for the review of overly broad business methods patents by the PTO.

“It is not a coincidence that since the CBM expired in September there has been a 51% increase in CBM-eligible lawsuits,” Mellin said. “In other words, technological innovation is being stymied precisely when quick adoption is essential for both financial institutions and their members. Dollars spent on such meritless litigation are less dollars that credit unions can deploy in their communities.”

Saying that the pandemic has accelerated the use of technology, smaller institutions — including many credit unions — typically lack the resources to develop technology internally. Instead, they often rely on innovative third-party vendors as the most efficient way of providing their members with the services they provide. Every time they work with a vendor to provide new technology, they are vulnerable to claims that they are violating a patent and must pay an additional licensing fee for using these new products, and many times, these claims are of questionable merit, Mellin wrote.

“Credit unions have a strong interest in ensuring that the U.S. patent system provides robust protection for meaningful innovations while also ensuring that low-quality patents, particularly those relating to business methods, are not used in abusive litigation,” Mellin said.

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