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 célÃ¨bre 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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