IBM, Microsoft, and Friends Renew Fight Against Patent-Troll Measure

The war over how to best exterminate patent trolls is reawakening from a brief cease-fire after President Obama called for reform in his State of the Union address.

A sign reading 'patent' has been put on a basket full of tomatoes during a protes staged by Greenpeace activists against food patents in front of the patent office in Munich, southern Germany, on July 20, 2010.
National Journal
Dustin Volz
Jan. 30, 2014, 6:29 a.m.

A power­ful co­ali­tion of large tech firms and oth­er busi­ness stake­hold­ers are rising up once again in op­pos­i­tion to a con­ten­tious pat­ent-re­form pro­vi­sion, as the Sen­ate weighs a path for­ward on le­gis­la­tion to slay so-called pat­ent trolls.

BSA | The Soft­ware Al­li­ance and over a hun­dred oth­er groups sent a let­ter to lead­er­ship of the Sen­ate Ju­di­ciary Com­mit­tee on Thursday warn­ing that ex­pan­sion of a pat­ent-re­view pro­gram housed at the Pat­ent and Trade­mark Of­fice will “hurt Amer­ica’s in­nov­at­ors — both small and large — and weak­en Amer­ica’s com­pet­it­ive ad­vant­age around the world, at a time when we can least af­ford it.”

The missive is en­dorsed by sev­er­al large tech firms, in­clud­ing IBM, Mi­crosoft, and Qual­comm, and it ar­rives a day be­fore Sen­ate Ju­di­ciary staffers are to sit down with key stake­hold­ers for a brief­ing on the meas­ure and oth­er pat­ent qual­ity is­sues, the third of four such edu­ca­tion­al meet­ings that have been sched­uled. Oth­er sig­nat­or­ies in­clude groups rep­res­ent­ing Amer­ic­an uni­versit­ies, tele­com­mu­nic­a­tions and phar­ma­ceut­ic­al com­pan­ies, and fin­an­cial ser­vices.

The pro­vi­sion, known to pat­ent wonks as “covered busi­ness meth­od” re­view, would ex­pand the pat­ent of­fice’s abil­ity to re­ject cer­tain in­fringe­ment claims made on low-qual­ity pat­ents. Cur­rently only fin­an­cial ser­vices pat­ents that are not tech­no­lo­gic­al in nature are eli­gible for such re­view, a mech­an­ism that was ad­op­ted with the pas­sage of the 2011 Amer­ica In­vents Act.

Many sup­port­ers of the re­view meth­od ex­pan­sion view it as the Ex­calibur ne­ces­sary to win the war against pat­ent trolls, the term du jour giv­en to com­pan­ies that pur­chase cheap pat­ents and use them for profit by fil­ing ques­tion­able in­fringe­ment law­suits, of­ten against small soft­ware star­tups that struggle to af­ford leg­al rep­res­ent­a­tion.

But BSA and oth­ers con­tend that al­low­ing the pat­ent of­fice to dis­card more pat­ents con­sidered poor in qual­ity over­cor­rects a sys­tem en­shrined in the Con­sti­tu­tion that has been the envy of the rest of the world for 200 years. Ex­pand­ing the re­view “would be to turn ill-ad­visedly and ir­re­voc­ably in a new dir­ec­tion — dis­crim­in­at­ing against an en­tire class of tech­no­logy in­nov­a­tion,” the groups write in their op­pos­i­tion let­ter.

Parts of the let­ter are nearly identic­al to one sent to the House Ju­di­ciary Com­mit­tee in Septem­ber, which led to the re­view ex­pan­sion’s even­tu­al re­mov­al by Chair­man Bob Good­latte, a Vir­gin­ia Re­pub­lic­an, in a man­ager’s amend­ment dur­ing the markup pro­cess. Good­latte ori­gin­ally favored the ex­pan­sion, but de­term­ined to get his In­nov­a­tion Act passed in 2013 and avoid a messy fight, he left the meas­ure on the cut­ting-room floor dur­ing com­mit­tee markup.

Good­latte quickly muscled his ed­ited In­nov­a­tion Act through the House, earn­ing a sweep­ing 325-91 vic­tory with strong sup­port from both parties. The om­ni­bus bill would re­quire plaintiffs to be more spe­cif­ic in pat­ent law­suits, in­crease trans­par­ency of pat­ent own­er­ship, re­duce the costs of dis­cov­ery and pro­tect end users, such as re­tail­ers or cof­fee shops. It ad­di­tion­ally makes it easi­er for those who suc­cess­fully de­fend them­selves against pat­ent trolls to re­cov­er leg­al costs, a pro­cess known as fee-shift­ing.

The let­ter touts its vic­tory in killing re­view meth­od ex­pan­ison in the House, not­ing that “the pro­vi­sion was re­moved [from the In­nov­a­tion Act] be­cause it had be­come clear that main­tain­ing the meas­ure was cre­at­ing a road­b­lock to passing any le­gis­la­tion. We be­lieve the same is true in the Sen­ate.

“Ex­pand­ing the CBM pro­gram is not just ill-ad­vised from a polit­ic­al stand­point, but from a policy per­spect­ive as well.”

Sen. Chuck Schu­mer has favored the CBM ex­pan­sion, in­tro­du­cing a bill last year that would al­low the re­view meth­od for all in­dus­tries and make it per­man­ent. In Decem­ber, the New York Demo­crat de­clared that “a pat­ent-re­form bill that does not ad­dress pat­ent qual­ity is like treat­ing the symp­tom in­stead of the dis­ease.”

“If any­one thinks they have val­id pat­ents, they shouldn’t be afraid of a pre­lim­in­ary pro­ceed­ing,” Schu­mer said dur­ing a Ju­di­ciary hear­ing ex­amin­ing pat­ent lit­ig­a­tion. “The only people who are afraid of this are those who know their pat­ents are in­val­id.”

Pat­ent-lit­ig­a­tion re­form is cap­tur­ing some re­newed in­terest in Wash­ing­ton after a brief lull fol­low­ing the pas­sage of the In­nov­a­tion Act. On Tues­day, Pres­id­ent Obama urged Con­gress to “pass a pat­ent re­form bill that al­lows our busi­nesses to stay fo­cused on in­nov­a­tion, not costly and need­less lit­ig­a­tion.”

Those 19 words may have been a fleet­ing nod to re­formers, but the pat­ent com­munity took it as a re­as­sur­ing sign that this time, at least, Con­gress and Obama agreed something needed to be done soon to curb the grow­ing ab­use of pat­ent trolling, which by some es­tim­ates cost the eco­nomy tens of bil­lions of dol­lars a year. The White House has en­dorsed Good­latte’s In­nov­a­tion Act and also urged ex­pan­sion of covered busi­ness meth­od re­view.

“It was a brief men­tion, but a strong men­tion,” said Mi­chael Beck­er­man, pres­id­ent and CEO of the In­ter­net As­so­ci­ation. “This does need to be on a little bit of a quick timeline, by Sen­ate stand­ards, be­cause this is an elec­tion year.”

Minor­ity Lead­er Mitch Mc­Con­nell, who res­ol­utely re­mained sit­ting with his arms fol­ded dur­ing much of the pres­id­ent’s speech, even leapt out of his seat to ap­plaud the call for pat­ent re­form.

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