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Patent Reform Just Took a Massive Setback in the Senate Patent Reform Just Took a Massive Setback in the Senate

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Patent Reform Just Took a Massive Setback in the Senate

Senate Judiciary Chairman Patrick Leahy announced Wednesday he was taking a bill aimed at reducing patent trolling off the agenda.

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(Win McNamee/Getty Images)

Just when it looked like a grand compromise was finally coming together, Senate negotiations over a major bill designed to curb abusive patent trolling have fallen apart.

It now appears the effort to reduce frivolous patent-infringement lawsuits is all but dead in Congress.

 

The Senate Judiciary Committee announced Wednesday that it was taking its patent consideration off its agenda, and gave no indication when it may next be up for a vote. The bill was scheduled for a vote Thursday, and sources on and off Capitol Hill had expressed renewed confidence that the package—already delayed for consideration several times over—was finally ready to be passed out of committee.

"Unfortunately, there has been no agreement on how to combat the scourge of patent trolls on our economy without burdening the companies and universities who rely on the patent system every day to protect their inventions," Chairman Patrick Leahy said in a statement. "We have heard repeated concerns that the House-passed bill went beyond the scope of addressing patent trolls and would have severe unintended consequences on legitimate patent-holders who employ thousands of Americans."

How Patent Trolls Are Costing the Economy Billions Each Year

 

Leahy continued, "If the stakeholders are able to reach a more targeted agreement that focuses on the problem of patent trolls, there will be a path for passage this year and I will bring it immediately to the committee."

Earlier in the day, patent-reform advocates said they expected Thursday's vote to go forward, as a draft of compromise language was circulating. But negotiations quickly deteriorated, sources said.

"I am surprised and disappointed that the Senate Democrat leadership is not willing to move forward on a bill that we've worked on so hard and we're ready and expecting to mark up tomorrow," said Sen. Chuck Grassley, the panel's top Republican, in a statement. "We put in a good-faith effort to get to this point, and it's too bad that the bill is being pulled from the agenda."

Added one patent lobbyist: "At 9 o'clock we were on track. By 11 we were off track."

 

Tech groups quickly denounced the decision to shelve patent reform.

"It is regrettable that the inability of Congress to advance widely supported legislation will expose many small companies to predatory litigation," Jonathan Zuck, president of ACT | The App Association, said in a statement. "Failing to act on this issue may profoundly impact the innovation we are seeing through small businesses and new entrants in the mobile economy."

Negotiations over how to appropriately address patent trolls—companies that buy up patents and then leach cash from inventors by threatening infringement lawsuits—have repeatedly bedeviled Senate staffers working on the issue. Throughout the debate, heavy lobbying from a wide swath of tech companies, entrepreneurs, pharmaceutical companies, universities, and financial services continued to complicate the multi-issue discussions.

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In particular, fee-shifting, which would make the loser pay the winner's legal fees in some infringement cases that are considered meritless, proved to be a sticking point. Republicans generally favor a strong fee-shifting provision, but Democrats, who typically earn support from trial lawyers fearful of anything that sounds like tort reform, are less supportive.

Leahy wanted "broad bipartisan support" for any bill he brought to his committee for consideration, but "competing companies on both sides of this issue refused to come to agreement on how to achieve that goal," he said in his statement.

Despite the obstacles, a deal being worked out between Sens. Chuck Schumer and John Cornyn that would have required federal judges to shift fees in certain cases had garnered substantial support in recent weeks. Even after several changes and tweaks, however, it was unable to satisfy everyone with a hand in the negotiations.

Schumer vowed Wednesday to continue working with Cornyn and others to "come up with a strong, comprehensive solution."

Late last year, the House passed the Innovation Act with enormous bipartisan support. That bill, sponsored by House Judiciary Chairman Bob Goodlatte, would require plaintiffs to be more specific in their lawsuits, increase transparency of patent ownership, reduce the costs of discovery, and protect end users, such as coffee shops that might purchase a patent-protected item from a vendor. It also makes it easier for those who successfully defend themselves against a patent lawsuit to recover legal costs.

Goodlatte, in a statement, called Leahy's decision to cancel a vote "extremely disappointing" and urged the Senate to use his Innovation Act "as a bipartisan roadmap."

"Unfortunately, we have only seen delay after delay come out of the Senate," the Virginia Republican said. "Effective patent reform legislation requires the careful balance that was achieved in the Innovation Act and so I urge the Senate to work with us on this issue instead of closing doors to meaningful patent reform."

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Love it - first thing I read in the morning."

Amy, VP of Communications

I read the Tech Edge every morning."

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