Patent News

May. 22, 2014

Science Insider AAAS: U.S. Senate Shelves Long-Debated ‘Patent Troll’ Bill, by Kelly Servick

This post originally appeared in Science Insider AAAS on May 22, 2014.

A U.S. Senate bill intended to crack down on frivolous patent lawsuits has floundered after months of negotiation between key stakeholders. The bill aimed to discourage so-called patent trolls—companies that amass patents with no intention of making any product and instead generate revenue by filing suits against allegedly infringing firms. But opponents of the bill—including university groups and biotech firms—feared the Senate’s offensive against patent predators would make it too costly for legitimate patent holders to protect their claims.

On Wednesday, Senator Patrick Leahy (D–VT), who introduced the Patent Transparency and Improvements Act in November 2013, pulled it from Thursday’s Judiciary Committee agenda. “Regrettably, competing companies on both sides of this issue refused to come to agreement,” Leahy said in a statement. The bill has been postponed repeatedly, and it is now unlikely that Congress will have time to act on it this year.

Opponents of the bill claimed certain provisions would make protecting their intellectual property prohibitively risky and expensive. One major concern was a provision that tries to discourage unfounded patent infringement lawsuits by requiring the losing party to pay the winning party’s legal fees. That might force patent trolls to think twice about taking a company to court, but it might also frighten a small business away from entering complicated litigation, says John Vaughn, executive vice president of the Association of American Universities (AAU), a Washington, D.C., group that represents major research campuses. “Universities don’t sue over patents very often, but their startup companies may, and neither universities nor startups have deep litigation budgets,” Vaughn tells ScienceInsider. (AAU supported language that would require the court to consider fee shifting only in certain circumstances.)

AAU, along with other organizations including the American Council on Education, the Association of University Technology Managers, and the Biotechnology Industry Organization, issued a letter on 20 May encouraging the committee not to support the bill. Another provision that makes them uneasy is the requirement that a patent holder who files a lawsuit disclose anyone with a financial interest in the patented product. That requirement is intended to prevent large, predatory patent holders from disguising themselves behind small shell companies, but it could also have negative effects on universities, Vaughn says. For one, it could put off venture capitalists who want to remain anonymous when investing in a new technology. The bill’s provisions “are all targeted at abusive practices, and we recognize that,” Vaughn says, but “universities saw unintended consequences that would sweep in legitimate behaviors.”

Technology companies, whose tangled assortments of patents make them prime targets for patent trolls, are among the bill’s supporters. The delay in the Senate is “deeply disappointing,” said Michael Beckerman, CEO of the Internet Association, whose members include Google, Facebook, and Amazon, in a statement. Beckerman suggested that Senate Majority Leader Harry Reid (D–NV) bypass the Judiciary Committee altogether by calling for a vote on similar legislation that passed in the House of Representatives (over the opposition of university groups) this past December.

Meanwhile, two bills now in the House Energy and Commerce Committee and Senate commerce committee aim to put more restrictions on demand letters—notices demanding licensing fees for infringement, which patent trolls often send out en masse with little detail about the patent in question. Vaughn says that compared with the Senate’s broad attempt at reform, this more targeted legislation has a better chance of becoming law this year.