Patent Troll Hunters Fight to Survive Winter — And Senate

Patent litigation reform advocates found success in the House — but they face a tough trial in the Senate.

WASHINGTON, DC - SEPTEMBER 17: Sen. Patrick Leahy (D-VT) talks to reporters after a Democratic Senate policy luncheon, on Capitol Hill, September 17, 2013 in Washington, DC. He was asked questions about gun control and yesterday's Navy Yard shooting.
National Journal
Dustin Volz
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Dustin Volz
Dec. 17, 2013, 2:35 a.m.

Pat­ent lit­ig­a­tion re­form hit an un­ex­pec­ted fever pitch in the House this fall, as Ju­di­ciary Com­mit­tee Chair­man Bob Good­latte muscled a bill through his com­mit­tee be­fore earn­ing a lop­sided bi­par­tis­an vic­tory on the House floor.

Now it’s the Sen­ate’s turn to wage war on pat­ent trolls, the term du jour for com­pan­ies that buy cheap pat­ents and use them to profit by fil­ing ques­tion­able in­fringe­ment law­suits. And after a week of re­l­at­ive quiet, stake­hold­ers are ramp­ing up lob­by­ing ef­forts again, de­term­ined to not let mo­mentum fade dur­ing the hol­i­day sea­son.

“We’re prag­mat­ic, and we are aware the Sen­ate isn’t go­ing to de­liv­er the pres­id­ent a bill by Decem­ber 25,” said Mi­chael Makin, pres­id­ent and CEO of Print­ing In­dus­tries of Amer­ica. “But that doesn’t mean we can’t keep be­ing good boys and make sure this is something on his wish list” in 2014.

The Sen­ate’s open­ing strike against trolls is a two-pan­el Ju­di­ciary hear­ing Tues­day, fea­tur­ing wide-ran­ging testi­mony from groups rep­res­ent­ing small busi­ness (in­clud­ing Makin), big pharma, large soft­ware in­terests, and a former pat­ent of­fi­cial. Ad­voc­ates are hop­ing the hear­ing paves the way for a markup that would move the meas­ure through com­mit­tee, say­ing they hope to get one by late Janu­ary or Feb­ru­ary.

But while the le­gis­lat­ive meas­ures be­ing con­sidered are largely sim­il­ar, the Sen­ate troll hunters are tak­ing a dif­fer­ent ap­proach — one that could cause some fis­sures in the big tent co­ali­tion that ral­lied to­geth­er House con­sid­er­a­tion.

Ju­di­ciary Chair­man Patrick Leahy, D-Vt., is start­ing with a re­l­at­ively small bill that by design is likely to in­cor­por­ate pro­pos­als from a hand­ful of oth­er sen­at­ors. It cur­rently ad­dresses end-user pro­tec­tions, and pat­ent own­er­ship trans­par­ency and gives the Fed­er­al Trade Com­mis­sion the abil­ity to po­lice ne­far­i­ous de­mand let­ters from pat­ent trolls.

Good­latte’s In­nov­a­tion Act, on the oth­er hand, began as an om­ni­bus swipe at pat­ent trolls when it was in­tro­duced in Oc­to­ber. Its most con­tro­ver­sial meas­ures were re­moved as the meas­ure went for­ward, but it stands as one com­pre­hens­ive, if not all-en­com­passing, vehicle that most stake­hold­ers gen­er­ally sup­port.

Lit­ig­a­tion re­form ad­voc­ates are clam­or­ing for stronger pro­vi­sions to come out of the Sen­ate, but any­thing that gets in­cor­por­ated in­to Leahy’s bill will re­quire con­sensus and bi­par­tis­an sup­port, aides say.

One is­sue cer­tain to at­tract some at­ten­tion is the con­tro­ver­sial Covered Busi­ness Meth­od re­view pro­gram, which al­lows the U.S. Pat­ent and Trade­mark Of­fice to re­ject in­fringe­ment claims on some pat­ents deemed low qual­ity.

An ex­pan­sion of that pro­gram was left on the cut­ting-room floor dur­ing markup of the House’s In­nov­a­tion Act, but Demo­crat­ic Sen. Chuck Schu­mer of New York has a bill seek­ing to strengthen it, be­liev­ing it would re­duce the amount of lit­ig­a­tion costs in the pat­ent sys­tem by help­ing to kill low-qual­ity pat­ents.

The meas­ure is op­posed by many large tech firms — in­clud­ing Adobe, which is testi­fy­ing Tues­day — but strongly sup­por­ted by most co­ali­tions rep­res­ent­ing tech start-ups and soft­ware in­nov­at­ors.

The small-guy in­terests still sup­port re­form le­gis­la­tion without the pro­vi­sion, some of the lar­ger in­terests, par­tic­u­larly IBM and Mi­crosoft, are will­ing to cam­paign vehe­mently against any bill in­clud­ing CBM ex­pan­sion. Their ef­forts were suc­cess­ful in con­vin­cing Good­latte to strike a meas­ure in his bill, and they ap­pear ready for an­oth­er round of vig­or­ous lob­by­ing if the Sen­ate en­ter­tains its ad­op­tion.

Still, small-busi­ness groups re­main hope­ful the pro­vi­sion stands a chance in the Sen­ate. Oth­er is­sues likely to stoke de­bate are fee-shift­ing and the cus­tom­er-stay pro­vi­sion in Leahy’s bill, which the Na­tion­al Re­tail Fed­er­a­tion calls a “pois­on pill.”

Aside from Schu­mer’s bill, Sen. Or­rin Hatch, R-Utah, has a pro­pos­al that tar­gets shell com­pan­ies and would re­quire them to post a bond if they lacked as­sets, which sup­port­ers say would in­crease the risks of pat­ent trolling. A bill from Sen. John Cornyn, R-Texas, aims to make pat­ent lit­ig­a­tion less costly and raises plead­ing re­quire­ments for the ori­gin­al com­plaint.

The Sen­ate hear­ing be­gins at 10 a.m.

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