The Patent Troll Wars are Back in Congress

The House is again primed to move on a patent-reform legislation, but questions linger about its prospects in the Senate.

A man works on the exhibit 'Cave Troll' 18 January 2007 in preparation of the show 'The Lord of the Rings' at the filmpark Babelsberg in Potsdam, eastern Germany.
National Journal
Dustin Volz
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Dustin Volz
Feb. 4, 2015, 2:55 p.m.

After nearly a year of be­ing put on ice, pat­ent re­form is back in Con­gress.

House Ju­di­ciary Chair­man Bob Good­latte on Thursday will re­in­tro­duce White House-sup­por­ted le­gis­la­tion that aims to re­duce pred­at­ory pat­ent lit­ig­a­tion — bet­ter known as “pat­ent trolling.”

The Vir­gin­ia Re­pub­lic­an is re­viv­ing the same bill that cleared the House with over­whelm­ing bi­par­tis­an sup­port last Con­gress, ac­cord­ing to sources fa­mil­i­ar with the lan­guage.

The le­gis­la­tion is widely ex­pec­ted to again face little res­ist­ance in the House, where it passed on a 325-91 vote a little more than a year ago. Good­latte rushed the lan­guage through the lower cham­ber in just 43 days, a pace so quick that even the bill’s op­pon­ents now openly con­cede they were caught off-guard.

Des­pite the bill’s pop­ular­ity in the House, the up­per cham­ber was un­able to ad­vance pat­ent re­form, as months of ne­go­ti­ations ul­ti­mately crumbled in the Sen­ate Ju­di­ciary Com­mit­tee.

Good­latte’s om­ni­bus pack­age would do many things to change pat­ent lit­ig­a­tion, in­clud­ing a re­quire­ment that plaintiffs be more spe­cif­ic in their law­suits. It would also re­quire more trans­par­ency re­gard­ing pat­ent own­er­ship, re­duce dis­cov­ery costs, and pro­tect so-called end users, such as cof­fee shops that buy a pat­en­ted product from an­oth­er vendor, from in­fringe­ment claims.

Dubbed the In­nov­a­tion Act, the bill is one of the top con­gres­sion­al pri­or­it­ies of a wide swath of tech com­pan­ies, star­tup busi­nesses and re­tail­ers, a di­verse co­ali­tion that claims pat­ent trolling — the prac­tice of ac­quir­ing ware­houses of pat­ents and us­ing them to si­phon cash from in­vent­ors by threat­en­ing in­fringe­ment law­suits — leaches bil­lions from the eco­nomy an­nu­ally and serves to un­der­cut the en­tre­pren­eur eco­nomy.

Stake­hold­ers that op­pose broad pat­ent re­form — in­clud­ing bi­otech com­pan­ies, big pharma, tri­al law­yers and some uni­versit­ies — ar­gue that Con­gress should be cau­tious about over­cor­rect­ing a pat­ent sys­tem that just went through a le­gis­lat­ive over­haul with the pas­sage of the 2011 Amer­ica In­vents Act.

Re­form ad­voc­ates dis­miss those claims as mer­it­less stalling tac­tics, but the “wait and see” caucus have more talk­ing points in their ar­sen­al fol­low­ing sev­er­al de­cisions by the Su­preme Court over the past year that tweaked the pat­ent lit­ig­a­tion sys­tem.

But ac­tion in the House will likely serve as merely an open­ing act for the Sen­ate, where ne­go­ti­ations over a series of wonky pro­vi­sions could again de­rail re­form ef­forts. Re­formers see reas­on for op­tim­ism this year — chief among them be­ing the Re­pub­lic­an takeover of the Sen­ate.

Last spring, then-Sen­ate Ma­jor­ity Lead­er Harry Re­id was widely blamed for killing pat­ent re­form just as a bi­par­tis­an com­prom­ise began to emerge in his cham­ber fol­low­ing months of ne­go­ti­ations led by Ju­di­ciary Chair­man Patrick Leahy and Sens. Chuck Schu­mer, John Cornyn, and Or­rin Hatch. Re­id, ac­cord­ing to nu­mer­ous sources on both sides of the aisle, told Leahy he wouldn’t bring any pat­ent bill to the floor be­cause it likely would have split the Demo­crat­ic caucus. Of par­tic­u­lar con­cern were griev­ances tri­al law­yers had with the bill, as they are a main Demo­crat­ic con­stitu­ency.

Still sting­ing from Re­id’s block, pat­ent re­formers say that Re­pub­lic­an con­trol of the Sen­ate has opened a door for their cause. And they be­lieve Ju­di­ciary Chair­man Chuck Grass­ley, who is ex­pec­ted to take over the Ju­di­ciary Com­mit­tee from Leahy, will make pat­ent re­form an early pri­or­ity for a Con­gress des­per­ate to find le­gis­la­tion that can earn bi­par­tis­an sup­port. Grass­ley has in­dic­ated pat­ent re­form is a pri­or­ity in his com­mit­tee but he has not yet out­lined a timetable for mov­ing for­ward.

Re­pub­lic­ans won’t be as swayed by tri­al law­yers, but the party has tra­di­tion­ally been more sym­path­et­ic to the con­cerns of phar­ma­ceut­ic­al and bio­med­ic­al com­pan­ies. One tech lob­by­ist called their lob­by­ing power the “800-pound gor­illa” that is most likely to thwart re­form ef­forts this Con­gress.

Des­pite the chal­lenges, Sil­ic­on Val­ley still con­siders pat­ent re­form a top pri­or­ity in the cur­rent cycle — and one of only a few policy areas where it has a real­ist­ic shot at suc­cess.

Good­latte aides would not say how many co-spon­sors the In­nov­a­tion Act had tal­lied so far. But aides did say the Ju­di­ciary sub­com­mit­tee on in­tel­lec­tu­al prop­erty, chaired by Rep. Dar­rell Issa, would hold a hear­ing next Thursday to ex­am­ine re­cent court cases deal­ing with pat­ents, in­clud­ing a spate of Su­preme Court de­cisions handed down last term.

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