Patent News

May. 21, 2014 Patent Reform Legislation Off The Table — For Now, by Andrew Williams

This post originally appeared in on May 21, 2014.

Earlier today, Senator Patrick Leahy (D-VT), Chairman of the Senate Committee on the Judiciary, announced that he was taking the Patent Transparency and Improvements Act of 2013 (S. 1720) off the Committee’s agenda. He cited as the reason a lack of “sufficient support behind any comprehensive deal” to address the problem of so-called patent trolls who are misusing the patent system. He pointed to “repeated concerns” that the Innovation Act that passed the House “went beyond the scope of addressing patent trolls, and would have severe unintended consequences on legitimate patent holders who employ thousands of Americans.” Sen. Leahy (at right) indicated that “competing companies on both sides of this issue refused to come to an agreement” that would have provided the broad bipartisan support required to get a bill through Senate. Nevertheless, he promised that if the stakeholders involved “are able to reach a more targeted agreement that focuses on the problem of patent trolls, there will be a path for passage this year and I will bring it immediately to the Committee.” A copy of Sen. Leahy’s press release can be found here.

We have not reported on the pending legislation before the Senate Judiciary Committee for several weeks, because even though it has appeared on the Committee’s agenda every week, it has been repeatedly postponed. Even so, reports have suggested that work on a compromise had been on-going, and that a bipartisan agreement was imminent. In fact, before Sen. Leahy’s announcement, it was suggested that a Manager’s Amendment would be considered by the Committee as early as tomorrow. In attempt to explain what happened, the National Journal reported that Henry Reid (D-NV), the majority leader, told Sen. Leahy that the patent reform bill would not even get to floor of the Senate, even if it passed out of Leahy’s Committee. The National Journal cited opposition from trial attorneys, the biotech industry, and pharmaceutical companies for the warning from Sen. Reid. Sen. John Cornyn (R-TX) apparently agreed with the criticisms levied against Mr. Reid, complaining that “the demands of one special interest group” should not trump the patent reform desires of the White House, House Democrats, and the bipartisan agreement in the Senate.

In response to the then-imminent vote in of the Committee, several organizations including the Biotechnology Industry Organization (BIO), the Innovation Alliance, and several university organizations, such as the Association of University Technology Mangers (AUTM), sent a letter on May 20, 2014 to the members of the Senate Judiciary Committee. This letter stated that the signatories could not support the proposed changes because they would substantially weaken the patent system. The letter indicated that these organizations have been working with members of the Judiciary Committee to craft a bill that would target frivolous patent litigation. Nevertheless, many of the current provisions would have had the effect of treating every patent holder as a patent troll. The letter stated that a patent system that weakens the ability of every patent holder to enforce its own patents would discourage innovation. The signatories concluded by opposing the legislation that the Judiciary Committee was considering, and asking that the members not support the proposed reforms.

Of course, not every organization was necessarily opposed to the pending Senate legislation. The Intellectual Property Organization (“IPO”), a trade association for owners of patents, trademarks, copyrights, and trade secrets and serving all intellectual property owners in all industries and all fields of technology, had supported a balanced, non-discriminatory change in the law to stop frivolous litigation and bad faith demand letters. IPO Executive Director Herb Wamsley released a statement today in which he indicated that “[w]hile IPO supported key parts of Leahy’s bill, compromises that were being proposed by various Senators were inconsistent with IPO positions.” Mr. Wamsley concluded by noting that that Sen. Leahy’s “announcement will give us more time to work with Congress this year or next year to obtain the best legislation to address the abusive litigation problem.” The IPO position and Mr. Wamsley’s comments can be found here.

Less measured in its response, the Electronic Frontier Foundation (“EFF”) accused Sen. Leahy of killing patent reform, even if temporarily. The EFF blamed the pharmaceutical, biotech, and university lobbies, complaining that these organizations “are hardly the victims of patent trolls anyway.” Of course, the legislation that the EFF has been pushing would impact these organizations just as much as the so-called patent trolls (except for some exceptions for Hatch-Waxman-type litigation). To highlight its extreme position, the EFF went as far as to accuse universities of “sometimes fuel[ing] patent trolls.” The EFF also has comedian Adam Corolla on its side. According to the Technocrat blog, Mr. Corolla was scheduled to be at an event today in the Russell Senate Office Building to support the proposed legislation. As we have previously reported, Mr. Corolla has been sued by Personal Audio for infringing its patent related to podcasting. Personal Audio has been labeled a troll by Mr. Corolla and others, even though it is a company owned by the inventor of the patent at issue. Mr. Corolla was quoted on the blog as calling for rules that would protect inventors, but that would also prevent so-called patent trolls from picking apart companies. Without commenting on the validity or scope of the patents owned by Personal Audio, Mr. Carolla’s concerns highlight the problem with crafting well-tailored legislation. Does Personal Audio represent an inventor trying to protect his patented ideas, or is he a troll because he does not practice the invention himself? This exemplifies why it is so important to define the problem before attempting to legislate against it. And this is perhaps another reason why the pending legislation has stalled in the Senate — it is impossible to narrowly tailor legislation against a vague notion that some entities are abusively asserting their patents.

We will continue to monitor the situation and we will report any updates if and when the Senate Judiciary Committee places the pending legislation back on its agenda. But as for now, it would appear that there will be no patent reform legislation this year.