Senators: Slow Hunt of Patent Trolls Isn’t Gridlock. It’s Genius.

As stakeholders ramp up their lobbying efforts, the Senate Judiciary Committee promises it is on the precipice of a grand compromise on how to best slay patent trolls.

National Journal
Dustin Volz
April 3, 2014, 9:16 a.m.

When fight­ing pat­ent trolls, it’s bet­ter to wait for a clean open­ing than to rush in­to a messy mel­ee.

That was the mes­sage con­veyed by sev­er­al mem­bers of the Sen­ate Ju­di­ciary Com­mit­tee on Thursday, as the pan­el took up pat­ent re­form for the second time in as many weeks — only to again delay markup of any le­gis­la­tion un­til at least next Tues­day.

Chair­man Patrick Leahy said dur­ing the com­mit­tee’s ex­ec­ut­ive busi­ness ses­sion that con­cerns over strik­ing the right bal­ance on the is­sue per­sist, but that he is hope­ful he is in the “fi­nal stages of ham­mer­ing out a man­ager’s amend­ment that is the res­ult of true com­prom­ise.”

The Ver­mont Demo­crat ad­ded that ne­go­ti­ations are in full swing on how to best curb the prob­lem of trolls — com­pan­ies that buy cheap pat­ents and use them for profit by threat­en­ing in­fringe­ment suits against oth­ers in hopes of set­tling — and that he wants to broker an agree­ment by the end of the week for full con­sid­er­a­tion next week.

Leahy gave some in­dic­a­tion of what a le­gis­lat­ive com­prom­ise might look like. He men­tioned fee-shift­ing, which would re­quire the loser to pay the win­ner’s leg­al fees in an in­fringe­ment case, as an im­port­ant meas­ure that has “mer­it” spe­cific­ally in pat­ent cases, but he noted that judges should main­tain a role in de­term­in­ing when to en­force it. The chair­man also men­tioned a pro­vi­sion from Sen. Or­rin Hatch that tar­gets shell com­pan­ies as one that is im­port­ant but re­mains com­plic­ated.

But while some of Thursday’s dis­cus­sion gave a peek at the be­hind-the-scenes saus­age-mak­ing, much of it in­volved law­makers de­fend­ing their slow ap­proach, which stands in stark con­trast to the House’s quick pas­sage of an om­ni­bus pat­ent bill, the In­nov­a­tion Act, late last year with large bi­par­tis­an sup­port.

“You are wise to delay,” Sen. Chuck Schu­mer told Leahy. “Get­ting a good bill is bet­ter than just get­ting a bill,” a phrase that Leahy and Chuck Grass­ley, the pan­el’s top Re­pub­lic­an, echoed.

Sen. Dick Durbin, mean­while, urged con­tin­ued cau­tion, and in­dic­ated the com­mit­tee is still ag­on­iz­ing over the prop­er scope of a num­ber of pro­vi­sions. 

“The House of Rep­res­ent­at­ives passed a bill in a hurry,” Durbin said. “In­tro­duced in one day, and came up for a vote on the House floor 43 days later. I’m not sure they had a thought­ful de­lib­er­a­tion, and I hope we do.”

The Illinois Demo­crat ad­ded that few­er than one in five in­fringe­ment suits is ac­tu­ally levied by a troll, cit­ing 2011 data from the Gov­ern­ment Ac­count­ab­il­ity Of­fice, and he said, “We need to make sure we pre­serve the rights of le­git­im­ate pat­ent hold­ers “¦ and don’t have un­in­ten­ded con­sequences.”

But House Ju­di­ciary Chair­man Bob Good­latte, who sponsored the In­nov­a­tion Act, said the Sen­ate needs to act swiftly, as time may be run­ning out.

“We think it’s im­port­ant that they act on it and they act ex­ped­i­tiously, as this Con­gress is about to close,” Good­latte told Na­tion­al Journ­al on Thursday. “But we also say it’s most im­port­ant that they get it right.”

The Vir­gin­ia Re­pub­lic­an said he doesn’t have a defin­it­ive timeline for when the Sen­ate needs to pass a bill, but ad­ded simply, “The soon­er, the bet­ter.”

Schu­mer, a New York Demo­crat, said earli­er this week that the Ju­di­ciary Com­mit­tee needed to act in April or May at the latest to have a chance of get­ting a pat­ent-re­form bill on the pres­id­ent’s desk this year. After the In­nov­a­tion Act’s pas­sage, many re­form ad­voc­ates had said they had hoped for Sen­ate Ju­di­ciary to pass a bill out of com­mit­tee by Janu­ary or Feb­ru­ary, a peri­od the pan­el oc­cu­pied with a series of edu­ca­tion­al brief­ings on pat­ent lit­ig­a­tion.

One of the reas­ons for the slog has been the in­tense at­ten­tion that pat­ent re­form has drawn from a wide swath of busi­ness in­terests in­clud­ing tech, uni­versit­ies, and re­tail­ers. A flurry of lob­by­ing from all sides has circled the Cap­it­ol this week, as start-ups and oth­er stake­hold­ers are mak­ing fi­nal pushes to keep their favored pro­vi­sions from be­ing left on the cut­ting room floor.

En­gine Ad­vocacy and the Con­sumer Elec­tron­ics As­so­ci­ation, for ex­ample, flew in a dozen founders of tech start-ups this week to meet with a hand­ful of law­makers and pat­ent staffers to plead for a strong anti-troll bill.

But lob­by­ing against sweep­ing re­form pro­vi­sions has also spiked. The Al­li­ance of U.S. Star­tups and In­vent­ors for Jobs and oth­er groups rep­res­ent­ing in­vent­ors met with Hill staffers Wed­nes­day to voice their op­pos­i­tion to a large swath of pro­pos­als on the table, in­clud­ing fee-shift­ing, cus­tom­er-stay, and heightened plead­ing stand­ards. Pil­ing on, about 30 or­gan­iz­a­tions rep­res­ent­ing uni­versit­ies, bi­otech, and med­ic­al sci­ences sent a force­ful let­ter to the Sen­ate Ju­di­ciary prom­ising to op­pose le­gis­la­tion that doesn’t strike the “ap­pro­pri­ate bal­ance” on a num­ber of con­tested pro­vi­sions.

The largest salvo may have come Thursday, as IBM, Mi­crosoft, Apple, and oth­er tech gi­ants joined with phar­ma­ceut­ic­al com­pan­ies and man­u­fac­tur­ers to form the Part­ner­ship for Amer­ic­an In­nov­a­tion to cau­tion law­makers to be ju­di­cious as they wrap up con­sid­er­a­tion of re­form pro­pos­als.

“Des­pite their dif­fer­ences, all of these com­pan­ies are uni­fied be­cause they de­pend on Amer­ica’s world lead­ing pat­ent sys­tem to safe­guard their in­vest­ments,” the the group says on its web­site.

As the lob­by­ing in­tens­i­fies, stake­hold­ers will con­tin­ue to do what they have done for months: wait. At least un­til next week.

{{ BIZOBJ (video: 4852) }}

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