How the House Judiciary Committee Made Killing Patent Trolls a 2013 Priority

The bill, designed to rein in abusive patent-litigation practices, passed the House 325-91 with sweeping bipartisan support.

WASHINGTON, DC - JULY 25: (R-L) Rep. Blake Farenthold (R-TX), Rep. George Holding (R-GA), Rep. Ron DeSantis (R-FL) and Rep. Jason Smith (R-MO), join othermembers of the House Courts, Intellectual Property and the Internet Subcommittee in wearing 3D glasses while watching a demonstration of 3D technology on Capitol Hill July 25, 2013 in Washington, DC. The subcommittee, a part of the House Judiciary Committee, heard testimony on the topic of 'Innovation in America: The Role of Copyrights.'
National Journal
Fawn Johnson and Dustin Volz
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Fawn Johnson Dustin Volz
Dec. 11, 2013, 3:04 p.m.

In a year that will go down as his­tor­ic­ally fruit­less even by the low stand­ards of Con­gress, the House Ju­di­ciary Com­mit­tee’s six-week push for the In­nov­a­tion Act from in­tro­duc­tion to floor pas­sage of­fers a rare ex­ample of a pro­duct­ive le­gis­lat­ive pro­cess in ac­tion.

The bill, de­signed to rein in ab­us­ive pat­ent-lit­ig­a­tion prac­tices, passed the House 325-91 on Dec. 5 with sweep­ing bi­par­tis­an sup­port, and it now awaits judg­ment in the Sen­ate. It’s a ser­i­ous bill, too: It makes pro­ced­ur­al changes in­ten­ded to lim­it the ad­verse im­pact of pat­ent trolls, or com­pan­ies that profit by buy­ing up pat­ents and us­ing them to tar­get in­vent­ors with in­fringe­ment law­suits.

The In­nov­a­tion Act 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.

So how did a bill of sub­stance sneak through the 113th Con­gress? Chair­man Bob Good­latte, R-Va., cites pat­ent trolls for rap­idly step­ping up their ab­uses, which are es­tim­ated to cost the U.S. eco­nomy tens of bil­lions of dol­lars an­nu­ally. In par­tic­u­lar, pat­ent trolling has ex­ploded in the soft­ware in­dustry.

“The is­sue has be­come much more high pro­file,” Good­latte said. “Be­fore, it was an is­sue that the tech com­munity was very con­cerned about. Now all the tech com­munit­ies’ cus­tom­ers, which is ba­sic­ally every busi­ness in Amer­ica, is con­cerned. And that makes a dif­fer­ence.”

But there’s more to the story. Backed by a co­hort of bi­par­tis­an co­spon­sors, Good­latte in­tro­duced the In­nov­a­tion Act in late Oc­to­ber, after so­li­cit­ing in­put on two dis­cus­sion drafts. His bill joined a crowded field of a half-dozen oth­er pat­ent-re­form meas­ures in­tro­duced this year. But while oth­er bills stood mo­tion­less, Good­latte man­aged to co­alesce enough stake­hold­ers around his bill to cre­ate a ter­min­al ve­lo­city of mo­mentum to ad­dress a grow­ing prob­lem in the lit­ig­a­tion world.

Cred­it that mo­mentum to both good tim­ing and Good­latte’s keen un­der­stand­ing of the tech­nic­al world.

For much of the year, im­mig­ra­tion was the cause célèbre of the tech lobby, with pat­ent re­form a not­able but dis­tant second. And gov­ern­ment-sur­veil­lance dis­clos­ures be­gin­ning in the sum­mer left pat­ent re­form po­ten­tially on the chop­ping block for the year’s le­gis­lat­ive agenda. But the In­nov­a­tion Act was in­tro­duced a week after the gov­ern­ment shut­down, when im­mig­ra­tion re­form ap­peared on ex­treme life sup­port. Frus­trated tech groups, from large play­ers like Google and Cisco to act­iv­ist groups like the Elec­tron­ic Fron­ti­er Found­a­tion, saw the bill as the best shot at get­ting something — any­thing — ac­com­plished in this year’s Con­gress, and im­me­di­ately launched a soph­ist­ic­ated and co­ordin­ated cheer­lead­ing cam­paign.

And al­though no one, in­clud­ing Good­latte, con­siders the bill per­fect, power­ful stake­hold­ers found enough good things in the bill to sup­port it after some of­fend­ing sec­tions were cut out.

One of the less no­ticed lob­by­ing wins for the pat­ent-bill spon­sors in­volved Phar­ma­ceut­ic­al Re­search and Man­u­fac­tur­ers of Amer­ica, which rep­res­ents drug com­pan­ies. Any move to re­strict pat­ent lit­ig­a­tion al­ways makes the phar­ma­ceut­ic­al in­dustry nervous, be­cause they spend a great deal of time and money de­fend­ing their most suc­cess­ful drug pat­ents.

PhRMA made clear its con­cerns about the pat­ent bill last month in a let­ter to Good­latte, out­lining sev­er­al ways in which the meas­ure un­in­ten­tion­ally un­der­mined le­git­im­ate drug pat­ents.

Be­cause PhRMA didn’t threaten to op­pose the bill out­right — a stance that would have made it dif­fi­cult for some Re­pub­lic­ans to vote for it — Good­latte was will­ing to listen. A few tweaks here and there to the le­gis­la­tion got PhRMA about half the changes it sought. The res­ult was this: “PhRMA com­mends the House of Rep­res­ent­at­ives for its work to curb ab­us­ive pat­ent lit­ig­a­tion,” Seni­or Vice Pres­id­ent Matt Ben­nett said in a state­ment. He ad­ded that the group still has con­cerns but looks for­ward to ad­dress­ing them in the Sen­ate ver­sion.

The same strategy was em­ployed by a num­ber of large tech firms, most not­ably Apple, Mi­crosoft, and IBM, to pres­sure Good­latte to nix a con­tro­ver­sial pro­vi­sion from his bill that would have strengthened the U.S. Pat­ent and Trade­mark Of­fice’s abil­ity to re­ject cer­tain in­fringe­ment claims made on low-qual­ity pat­ents. Lead­ing up to the bill’s com­mit­tee markup, IBM un­leashed an ag­gress­ive pub­lic-re­la­tions cam­paign seek­ing to kill the pro­vi­sion on grounds it would “di­min­ish U.S. com­pet­it­ive­ness by de­valu­ing a class of U.S. pat­ents and in­vit­ing our trad­ing part­ners to do the same.”

Chris Pa­dilla, IBM’s vice pres­id­ent of gov­ern­ment­al pro­grams, told Na­tion­al Journ­al Daily that the In­nov­a­tion Act would “move ahead very ex­ped­i­tiously” and cre­ate a “kum­baya mo­ment” among the dis­par­ate stake­hold­ers if the pat­ent-qual­ity pro­vi­sion was re­moved. He prom­ised full-throated op­pos­i­tion from IBM and oth­ers if it stayed.

The gam­bit worked, and Good­latte craf­ted a man­ager’s amend­ment that struck the pro­vi­sion. Many pat­ent-re­form ad­voc­ates cursed the de­cision be­hind closed doors but largely held their tongues in pub­lic, de­cid­ing to fight for the ex­pan­sion an­oth­er day.

Good­latte’s shep­herd­ing of his In­nov­a­tion Act — and his de­sire to build a broad con­sensus even at the ex­pense of some is­sues he cares about — re­calls the pas­sage of the 2011 Amer­ica In­vents Act, con­sidered the most sub­stan­tial up­date to the pat­ent sys­tem since the 1950s. The AIA, au­thored by pre­vi­ous Ju­di­ciary Com­mit­tee Chair­man Lamar Smith, R-Texas, changes the pat­ent sys­tem from “first to in­vent” to “first in­vent­or to file.”

“Some of the things that are in the In­nov­a­tion Act are things that we tried to write in that bill and couldn’t get done,” Good­latte said. “These are things that couldn’t get done be­fore and now can be­cause of both changed cir­cum­stances here and changed cir­cum­stances out­side, par­tic­u­larly pat­ent trolls send­ing let­ters to every­body and their broth­er.”

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