The House Just Passed Patent Reform. Here’s Why It Matters.

WASHINGTON, DC - APRIL 25: Rep. Bob Goodlatte (R-VA) (R), Chairman of the House Judiciary Committee, and Rep. Trey Gowdy (R-SC) speak about immigration during a news conference on Capitol Hill, April 25, 2013 in Washington, DC. The news conference was held to discuss immigration control issues that are before Congress. (Photo by Mark Wilson/Getty Images)
National Journal
Dustin Volz
Dec. 5, 2013, 8:46 a.m.

Fol­low­ing hours of back-and-forth verbal spar­ring, the House passed a bill Thursday aimed at re­du­cing pred­at­ory pat­ent lit­ig­a­tion, mark­ing the first step for­ward for pat­ent-re­form ad­voc­ates since the pas­sage of the 2011 Amer­ica In­vents Act.

The bill, which passed with strong bi­par­tis­an sup­port on a 325-91 vote, makes pro­ced­ur­al changes in­ten­ded to lim­it the ad­verse and chilling im­pact on in­nov­a­tion made by so-called pat­ent trolls, or com­pan­ies that profit by buy­ing up pat­ents and us­ing them to tar­get oth­ers with in­fringe­ment law­suits. The bill 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 who 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.

“This bi­par­tis­an le­gis­la­tion should send a power­ful mes­sage to pat­ent trolls that their con­tin­ued ab­use of the pat­ent sys­tem and ex­tor­tion of Amer­ic­an busi­nesses will not be tol­er­ated,” said Mi­chael Beck­er­man, pres­id­ent and CEO of the In­ter­net As­so­ci­ation, in a state­ment. “We are also en­cour­aged by the White House’s sup­port of the bill and will con­tin­ue to work with the Sen­ate to en­sure the pas­sage of strong and ef­fect­ive le­gis­la­tion that de­ters the ab­us­ive lit­ig­a­tion prac­tices of pat­ent trolls and pro­motes in­nov­a­tion and eco­nom­ic growth.”

Pat­ent-troll lit­ig­a­tion costs the U.S. eco­nomy $80 bil­lion a year, ac­cord­ing to one oft-cited study from Bo­ston Uni­versity. Though some dis­pute those num­bers, nearly every­one agrees that pat­ent trolling is a prob­lem that has bal­looned in re­cent years, par­tic­u­larly in the soft­ware in­dustry.

But the In­nov­a­tion Act also rep­res­ents the first sub­stan­tial vic­tory to some sec­tors of the tech com­munity that have be­come in­creas­ingly frus­trated with Con­gress’s in­ab­il­ity to ad­dress their top con­cerns. Im­mig­ra­tion re­form con­tin­ues to flounder and gov­ern­ment-sur­veil­lance dis­clos­ures con­tin­ue to agit­ate large swaths of the tech com­munity, both big and small.

Des­pite the bill’s easy pas­sage in the House, no one, in­clud­ing Ju­di­ciary Com­mit­tee Chair­man Bob Good­latte, R-Va., thinks the bill is a pan­acea. It was greeted with nearly un­fettered en­thu­si­asm when it landed in late Oc­to­ber, the cul­min­a­tion of months of work and two pub­lic-dis­cus­sion drafts. But the co­ali­tion of large tech firms, start-ups, and soft­ware en­tre­pren­eurs began to show crack as the bill quickly slogged through Con­gress. Op­pon­ents said the bill was strong-armed through the Ju­di­ciary Com­mit­tee.

Ad­di­tion­ally, a con­tro­ver­sial pro­vi­sion cham­pioned by many “small guy” stake­hold­ers that would have strengthened the Pat­ent and Trade­mark Of­fice’s abil­ity to re­ject in­fringe­ment claims made on bad-qual­ity pat­ents was nixed by Good­latte fol­low­ing a do-or-die cam­paign against it waged by large tech firms, in­clud­ing IBM and Mi­crosoft.

“It’s not a per­fect bill, but it’s the closest we’ve ever come to real re­form that would get pat­ent trolls out of the way of in­nov­a­tion, and bring our pat­ent sys­tem near­er to its goal of pro­mot­ing the pro­gress of sci­ence and use­ful arts,” said Ju­lie Samuels, a staff at­tor­ney with the Elec­tron­ic Fron­ti­er Found­a­tion and the Mark Cuban Chair to Elim­in­ate Stu­pid Pat­ents.

Eight amend­ments were brought to the floor Thursday morn­ing, but only four small changes earned ap­prov­al, in­clud­ing one by Rep. Jared Pol­is, D-Colo., re­quir­ing more trans­par­ency in de­mand let­ters, and an­oth­er by Rep. Sheila Jack­son Lee, D-Texas, com­mis­sion­ing a study on the eco­nom­ic im­pact of the bill. A sub­sti­tute amend­ment by Reps. John Con­yers and Mel Watt, which Good­latte re­buked as “a pois­on pill that will kill any at­tempt at mean­ing­ful re­form in Con­gress,” was turned down.

Pat­ent-re­form ad­voc­ates now turn their eyes to the Sen­ate, where Ju­di­ciary Chair­man Patrick Leahy, D-Vt., has sched­uled a Dec. 17 hear­ing for a bill that is sim­il­ar to Good­latte’s but is open to hav­ing oth­er pro­pos­als tacked on. Sens. John Cornyn, Or­rin Hatch. and Chuck Schu­mer have all offered their own bills as well.

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