Patent Trolls’ New Strategy to Kill Patent Reform? Support Patent Reform.

Intellectual Ventures supports a bill that seeks to curtail patent trolling, which critics say is a good sign the bill doesn’t amount to much — or is headed nowhere fast.

Lynley Kirkness dressed as an elf admires the five-metre-high replica of the cave troll on the eve of the official opening of The Lord of the Rings Motion Picture Trilogy - The Exhibition at the Powerhouse Museum in Sydney, 22 December 2004, which is its only display venue in Australia.
National Journal
Dustin Volz
July 31, 2014, 1 a.m.

A com­pany of­ten ac­cused of be­ing one of the most fre­quent ab­users of the na­tion’s pat­ent laws is now en­dors­ing a meas­ure in Con­gress de­signed to slay pat­ent trolls.

But the sud­den peace of­fer­ing amounts to little more than a low-risk pub­li­city stunt, the firm’s crit­ics say, and be­lies its staunch op­pos­i­tion to rein­ing in such ne­far­i­ous be­ha­vi­or.

In­tel­lec­tu­al Ven­tures sent a let­ter to law­makers last week sig­nal­ing its sup­port for the TROL Act, a nar­row meas­ure that ef­fect­ively rep­res­ents the last pat­ent-re­form bill stand­ing in Con­gress in a year that wit­nessed crush­ing de­feats to oth­er, more sweep­ing re­form meas­ures.

“The TROL Act is a pos­it­ive step to­ward end­ing ab­us­ive de­mand let­ters,” the com­pany wrote in its let­ter. “We com­mend you and your staffs for tak­ing a bal­anced ap­proach to the prob­lem of mis­lead­ing pat­ent de­mand let­ters while re­cog­niz­ing the need for le­git­im­ate pat­ent own­ers to law­fully com­mu­nic­ate with parties be­lieved to be in­fringing on their in­tel­lec­tu­al prop­erty.”

The ad­vocacy puts In­tel­lec­tu­al Ven­tures on an un­usu­al side of a con­ten­tious de­bate over how Con­gress should deal with so-called pat­ent trolling — the prac­tice of com­pan­ies buy­ing up scores of cheap, vague pat­ents and us­ing them to leach cash from in­vent­ors by threat­en­ing in­fringe­ment suits. The Bel­levue, Wash.-based com­pany foun­ded by former Mi­crosoft ex­ec­ut­ives has tra­di­tion­ally been op­posed to most re­form ef­forts, and it lob­bied against a big­ger meas­ure that passed the House late last year be­fore dy­ing this spring in the Sen­ate.

But a num­ber of vet­er­an pat­ent-re­form ad­voc­ates see In­tel­lec­tu­al Ven­tures’ em­brace of the TROL Act not as an about-face but as fur­ther evid­ence of the com­pany’s du­pli­cit­ous ef­forts to gum up real re­form ef­forts — and a re­mind­er of how weak the le­gis­la­tion really is.

Au­thored by Re­pub­lic­an Rep. Lee Terry, the TROL Act would re­quire that de­mand let­ters, which com­pan­ies send to ac­cuse oth­ers of pat­ent in­fringe­ment, be more trans­par­ent and spe­cif­ic in their lan­guage. It also would co­di­fy powers gran­ted to the Fed­er­al Trade Com­mis­sion and state at­tor­neys gen­er­al to po­lice the de­liv­ery of ab­us­ive de­mand let­ters.

The meas­ure passed the House En­ergy and Com­merce’s Trade Sub­com­mit­tee, which Terry chairs, earli­er this month mostly along party lines, over­com­ing a late surge of op­pos­i­tion from some skep­tic­al Demo­crats who ac­cused Terry of block­ing im­port­ant stake­hold­ers — in­cluld­ing the FTC — from ne­go­ti­ations.

Some law­makers also sug­ges­ted that the TROL Act was a largely in­con­sequen­tial bill that would di­vert at­ten­tion from passing more-sub­stan­tial pat­ent re­form, such as the In­nov­a­tion Act, an om­ni­bus bill that passed the House late last year be­fore the Sen­ate shelved it.

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That sen­ti­ment — that the the TROL Act gives largely lip-ser­vice to pat­ent re­form — is shared by a num­ber of groups that have been ag­gress­ively push­ing for le­gis­lat­ive re­lief in the war on pat­ent trolls for years.

Com­puter and Com­mu­nic­a­tions In­dustry As­so­ci­ation Pres­id­ent Ed Black de­rided the meas­ure as one that “would ac­tu­ally em­power trolls and in­su­late ab­us­ive con­duct — that’s why pat­ent trolls are sup­port­ing it and those like us who want real re­forms are not.”

The TROL Act has “some small be­ne­fit” to the FTC in poli­cing bad act­ors who send out frivol­ous de­mand let­ters, but the agency already has the au­thor­ity to chase after the most ab­us­ive trolls, said Daniel Nazer, a staff law­yer at the pro-re­form Elec­tron­ic Fron­ti­er Found­a­tion. The bill would also pree­mpt some re­cently passed state laws ad­dress­ing de­mand let­ters, he ad­ded.

“I don’t think they care one way or an­oth­er about this bill. They just want to point to something and say, ‘Look what we sup­port,’ ” Nazer said. “The people work­ing on this bill aren’t try­ing to de­rail broad­er pat­ent re­form, but In­tel­lec­tu­al Ven­tures sure is.”

In­tel­lec­tu­al Ven­tures, however, con­tends that its sup­port for pat­ent re­form is genu­ine.

“More than a dozen groups, rep­res­ent­ing thou­sands of com­pan­ies, have writ­ten in sup­port of Chair­man Terry’s work on this le­gis­la­tion,” a spokes­man said. “Our let­ter, which echoes the sup­port ex­pressed by those in­dustry groups and also pro­poses ad­di­tion­al le­gis­la­tion to pro­tect small busi­nesses, is an ef­fort to be a con­struct­ive part of the de­bate.”

Re­gard­less of Ven­tures’ sup­port, the TROL Act likely faces an up­hill battle. One pat­ent lob­by­ist said House Ju­di­ciary Chair­man Bob Good­latte, who quickly throttled his In­nov­a­tion Act through the House last year, has asked lead­er­ship to not al­low Terry’s bill onto the floor. Good­latte, a Vir­gin­ia Re­pub­lic­an, doesn’t want move­ment on the TROL Act to take the wind out of his more com­pre­hens­ive pat­ent-re­form ef­forts” either this year or next year, the lob­by­ist said.

Good­latte “sup­ports com­pre­hens­ive pat­ent re­form, spe­cific­ally, the re­forms made in the In­nov­a­tion Act,” a House Ju­di­ciary aide said when asked about the mat­ter. “De­mand-let­ter le­gis­la­tion can be a part of the solu­tion, but he re­mains com­mit­ted to ad­dress­ing the prob­lem en­tirely.”

An En­ergy and Com­merce aide, mean­while, said there was no timeline yet for the full com­mit­tee to con­sider the bill, and that Chair­man Fred Up­ton was still work­ing to in­crease sup­port for it.

In­tel­lec­tu­al Ven­tures boasts one of the largest pat­ent port­fo­li­os in the coun­try but rarely de­vel­ops its own products. It has ad­di­tion­ally equipped thou­sands of shell com­pan­ies with pat­ents in re­cent years in an ef­fort to more eas­ily levy in­fringe­ment claims against oth­ers with re­duced risk, ac­cord­ing to a 2012 Stan­ford study. Ven­tures pub­licly ac­know­ledged that it buys oth­er com­pan­ies an­onym­ously but dis­putes claims that it is not trans­par­ent in its law­suits.

In Feb­ru­ary, In­tel­lec­tu­al Ven­tures filed with the Fed­er­al Elec­tion Com­mis­sion to form a polit­ic­al ac­tion com­mit­tee, a de­cision seen by many as an at­tempt to in­crease its in­flu­ence in a then-sim­mer­ing de­bate on Cap­it­ol Hill over how to re­form the pat­ent-lit­ig­a­tion sys­tem.

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