'Patent Troll' legislation moving quickly. Help needed!

'Patent Troll' legislation moving quickly.  Help needed!

July 16, 2015

Our friends at NVCA have asked us to reach out to you in the hopes that you will reach out to your Congressperson & Senator regarding the bill below.  In addition, a note to Rep. Adam Kinzinger (staffer email: [email protected]) and Rep. John Shimkus (staffer email: [email protected]) who are working on passage of these bills in both the House (H.R. 9) and in the Senate (S. 1137).  

For reference, IVCA Board Member Jeff Diehl’s note to Rep. Shimkus is at the bottom of this note.

The National Venture Capital Association is heavily involved in national policy issues facing the venture capital community.  NVCA is concerned with three specific areas that we wanted you to be aware of:

  1. Fee Shifting – Both bills will increase the risk of patent litigation for startups by creating an overly broad fee shifting standard that gives a significant advantage to large incumbent companies and even large patent trolls that have the financial resources to engage in litigation in ways startups simply can’t match.
  2. Joinder – Setting a disturbing precedent, H.R. 9 provides not only that startups would be on the hook for legal fees if they lose in patent litigation, but so too would their venture capital investors if the portfolio company goes bankrupt.
  3. Discovery & Pleadings – Further stacking the deck against small startups, both bills will increase the cost of patent litigation by creating unnecessary requirements in pleadings and opportunities for expensive delays during the discovery process.

Because legislation is moving quickly, we don’t have much time to waste.  Get engaged in NVCA’s advocacy efforts today by engaging directly with lawmakers to share your concerns with H.R. 9 and S. 1137.

What you can do:

  1. Reach out to your local congressperson to tell them you have concerns with H.R. 9.  Find My Congressman
  2. Contact the author of H.R. 9, Congressman Bob Goodlatte, to express your concerns with his legislation. Contact Bob Goodlatte
  3. Contact your state’s senators to tell them you have concerns with S. 1137. Contact Your Senators

To aid in your outreach efforts NVCA has developed a set of talking points and a one-pager outlining their concerns with H.R. 9 and S. 1137.  To stay current on NVCA’s national advocacy efforts, please visit the NVCA patent reform page for updates.  If you would like to connect directly with NVCA to learn more about what you can do to help or would like to be added to a list to receive updates on the issue, please contact Justin Field at [email protected].

From: Diehl, Jeffrey 

Sent: Wednesday, July 15, 2015 11:52 PM

To: '[email protected]'

Subject: Message to Representative John Shimkus re: HR9 bill

Honorable Representative John Shimkus:

I am the Managing Partner of Adams Street Partners, a 130-person employee-owned global venture capital and private equity firm with headquarters in Chicago.  We were founded inside of First Chicago in 1972 and became an independently-owned company in 2000.  We have been operating exclusively in the venture capital and private equity industry for 43 years.  We have funded numerous early and mid-stage technology and healthcare companies in Illinois that have gone on to create significant innovation and employment.  Last year, one of our companies in Arlington Heights, Illinois (Paylocity – NASDAQ: PCTY) was fortunate enough to price its public offering on the NASDAQ after 17 years as a privately held and venture-backed company.  It has grown from a start-up with no employees to a company that employs over 1,200 people, most of those in Illinois.  In addition, our firm is a limited partner in numerous venture capital funds that invest in start-ups across the globe, including in Illinois.  These start-ups have driven the majority of the increase in employment across the United States over the last several decades.

I am writing you in regards to concerns I have with the HR9 bill that you are working on in the House of Representatives.  While our firm and our industry is supportive of your efforts to reform our patent litigation system, I have two specific concerns and a suggestion that could help address the problems you are working hard to solve while ensuring that the venture capital and start-up industry are not impacted negative by the HR9 bill that has so many positive merits.

Specifically, there are two provisions in the bill, the “joinder” and “fee-shifting” provisions, that could have a significant negative impact on start-ups and their venture capital investors who are working hard and taking risks to create jobs and innovation in Illinois and across the United States.  You intentions of these provisions is quite good in the hopes of limiting patent troll activity which is a nuisance and a burden to productive operating companies who are attempting to exploit their innovations.  However, these provisions as currently written put our companies at a disadvantage relative to large businesses that often use litigation as a competitive weapon to squash venture-backed companies.  Large companies have significant resources that can be used to fund litigation as a competitive weapon against venture-backed companies.  Your intention is not to provide these companies with an advantage, but rather to limit the frivolous lawsuits that are brought by trolls.

My request for you is that you consider a carve-out for venture capital operating companies and their investors from these two provisions. This will enable these companies to better fend off litigation from large companies, including counter-suing them to defend themselves, without the fear of being pushed into bankruptcy by an adverse ruling that could be allowed by the HR9 bill.  By providing this carve-out, you will accomplish your goal of limiting troll suits, while still enabling venture-backed companies and their investors to have an even playing field against large companies who choose to use litigation as a competitive weapon.

Thank you in advance for your consideration and of course our employees and our companies thank you for your tireless work to help our industry and the jobs and innovation we are striving to create.


Jeff Diehl
Managing Partner
Adams Street Partners
[email protected]