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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.

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(Torsten Blackwood/AFP/Getty Images)

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."

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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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