Patent Troll Hunters Fight to Survive Winter — And Senate

Patent litigation reform advocates found success in the House — but they face a tough trial in the Senate.

WASHINGTON, DC - SEPTEMBER 17: Sen. Patrick Leahy (D-VT) talks to reporters after a Democratic Senate policy luncheon, on Capitol Hill, September 17, 2013 in Washington, DC. He was asked questions about gun control and yesterday's Navy Yard shooting.
National Journal
Dustin Volz
Dec. 17, 2013, 2:35 a.m.

Pat­ent lit­ig­a­tion re­form hit an un­ex­pec­ted fever pitch in the House this fall, as Ju­di­ciary Com­mit­tee Chair­man Bob Good­latte muscled a bill through his com­mit­tee be­fore earn­ing a lop­sided bi­par­tis­an vic­tory on the House floor.

Now it’s the Sen­ate’s turn to wage war on pat­ent trolls, the term du jour for com­pan­ies that buy cheap pat­ents and use them to profit by fil­ing ques­tion­able in­fringe­ment law­suits. And after a week of re­l­at­ive quiet, stake­hold­ers are ramp­ing up lob­by­ing ef­forts again, de­term­ined to not let mo­mentum fade dur­ing the hol­i­day sea­son.

“We’re prag­mat­ic, and we are aware the Sen­ate isn’t go­ing to de­liv­er the pres­id­ent a bill by Decem­ber 25,” said Mi­chael Makin, pres­id­ent and CEO of Print­ing In­dus­tries of Amer­ica. “But that doesn’t mean we can’t keep be­ing good boys and make sure this is something on his wish list” in 2014.

The Sen­ate’s open­ing strike against trolls is a two-pan­el Ju­di­ciary hear­ing Tues­day, fea­tur­ing wide-ran­ging testi­mony from groups rep­res­ent­ing small busi­ness (in­clud­ing Makin), big pharma, large soft­ware in­terests, and a former pat­ent of­fi­cial. Ad­voc­ates are hop­ing the hear­ing paves the way for a markup that would move the meas­ure through com­mit­tee, say­ing they hope to get one by late Janu­ary or Feb­ru­ary.

But while the le­gis­lat­ive meas­ures be­ing con­sidered are largely sim­il­ar, the Sen­ate troll hunters are tak­ing a dif­fer­ent ap­proach — one that could cause some fis­sures in the big tent co­ali­tion that ral­lied to­geth­er House con­sid­er­a­tion.

Ju­di­ciary Chair­man Patrick Leahy, D-Vt., is start­ing with a re­l­at­ively small bill that by design is likely to in­cor­por­ate pro­pos­als from a hand­ful of oth­er sen­at­ors. It cur­rently ad­dresses end-user pro­tec­tions, and pat­ent own­er­ship trans­par­ency and gives the Fed­er­al Trade Com­mis­sion the abil­ity to po­lice ne­far­i­ous de­mand let­ters from pat­ent trolls.

Good­latte’s In­nov­a­tion Act, on the oth­er hand, began as an om­ni­bus swipe at pat­ent trolls when it was in­tro­duced in Oc­to­ber. Its most con­tro­ver­sial meas­ures were re­moved as the meas­ure went for­ward, but it stands as one com­pre­hens­ive, if not all-en­com­passing, vehicle that most stake­hold­ers gen­er­ally sup­port.

Lit­ig­a­tion re­form ad­voc­ates are clam­or­ing for stronger pro­vi­sions to come out of the Sen­ate, but any­thing that gets in­cor­por­ated in­to Leahy’s bill will re­quire con­sensus and bi­par­tis­an sup­port, aides say.

One is­sue cer­tain to at­tract some at­ten­tion is the con­tro­ver­sial Covered Busi­ness Meth­od re­view pro­gram, which al­lows the U.S. Pat­ent and Trade­mark Of­fice to re­ject in­fringe­ment claims on some pat­ents deemed low qual­ity.

An ex­pan­sion of that pro­gram was left on the cut­ting-room floor dur­ing markup of the House’s In­nov­a­tion Act, but Demo­crat­ic Sen. Chuck Schu­mer of New York has a bill seek­ing to strengthen it, be­liev­ing it would re­duce the amount of lit­ig­a­tion costs in the pat­ent sys­tem by help­ing to kill low-qual­ity pat­ents.

The meas­ure is op­posed by many large tech firms — in­clud­ing Adobe, which is testi­fy­ing Tues­day — but strongly sup­por­ted by most co­ali­tions rep­res­ent­ing tech start-ups and soft­ware in­nov­at­ors.

The small-guy in­terests still sup­port re­form le­gis­la­tion without the pro­vi­sion, some of the lar­ger in­terests, par­tic­u­larly IBM and Mi­crosoft, are will­ing to cam­paign vehe­mently against any bill in­clud­ing CBM ex­pan­sion. Their ef­forts were suc­cess­ful in con­vin­cing Good­latte to strike a meas­ure in his bill, and they ap­pear ready for an­oth­er round of vig­or­ous lob­by­ing if the Sen­ate en­ter­tains its ad­op­tion.

Still, small-busi­ness groups re­main hope­ful the pro­vi­sion stands a chance in the Sen­ate. Oth­er is­sues likely to stoke de­bate are fee-shift­ing and the cus­tom­er-stay pro­vi­sion in Leahy’s bill, which the Na­tion­al Re­tail Fed­er­a­tion calls a “pois­on pill.”

Aside from Schu­mer’s bill, Sen. Or­rin Hatch, R-Utah, has a pro­pos­al that tar­gets shell com­pan­ies and would re­quire them to post a bond if they lacked as­sets, which sup­port­ers say would in­crease the risks of pat­ent trolling. A bill from Sen. John Cornyn, R-Texas, aims to make pat­ent lit­ig­a­tion less costly and raises plead­ing re­quire­ments for the ori­gin­al com­plaint.

The Sen­ate hear­ing be­gins at 10 a.m.

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