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By Tony Dutra
April 29 — Legislation to address patent litigation abuses now appears likely to move quickly in Congress after the announcement of a Senate bill that largely tracks the Innovation Act currently progressing in the House.
Seven members of the Senate Judiciary Committee introduced the bill in a half-hour press conference April 29. It attempts to tackle each of the problems of concern in H.R. 9 and contains versions of two key provisions—requiring a heightened standard for pleading infringement and letting manufacturers take over lawsuits against their customers—that closely match the House approach.
The Protecting American Talent and Entrepreneurship (PATENT) Act differs in some significant ways from the House bill, however. Both bills encourage judges to be more willing to award attorneys' fees to the prevailing party but the Senate version includes no explicit shifting of the burden to the losing party to defend its original case.
Those variations and others were discussed as potential improvements to the Innovation Act by the House Judiciary Committee in an April 14 hearing, but without commitment from that bill's primary sponsor, Rep. Robert W. Goodlatte (R-Va.).
“This is not the Innovation Act,” Committee Chairman Chuck Grassley (R-Iowa) told reporters after the press conference.
“While differences remain between the Innovation Act, which I introduced in the House earlier this year, and the Senate bill, I look forward to working with my colleagues to enact strong, meaningful reforms to curb patent litigation abuses,” Goodlatte said in a statement sent right after the press conference.
The PATENT Act also addresses the pre-litigation “demand letter” problem attributed to so-called patent trolls. The House Judiciary Committee claimed that issue was beyond its jurisdiction, but a separate committee in the House is filling that gap in any case with the TROL Act.
Grassley said that the Senate bill would be introduced today, and that the committee would hold a hearing on May 7, with the intention to move quickly to markup and report it out of committee before Memorial Day.
Grassley also rejected requests to predict the future of a previously introduced Senate bill on overlapping issues—Sen. Christopher A. Coons's STRONG Patents Act.
“I am disappointed to see that the PATENT Act lacks any support for patent-holders facing well-documented abuse in post-grant proceedings,” Coons said in a statement, referring to a “reverse trolling” problem now occurring via the patent challenge capabilities enabled by the 2011 America Invents Act (AIA).
“I look forward to reviewing the details of the PATENT Act and working with my colleagues to ensure that we end the abuse that is actively undermining our nation’s ability to invest in high-risk ventures and break new ground in our fights against diseases from Alzheimer’s to Multiple Sclerosis,” he said.
Grassley and ranking member Patrick Leahy (D-Vt.)—largely responsible for the AIA—were joined by Sens. John Cornyn (R-Texas), Chuck Schumer (D-N.Y.), Mike Lee (R-Utah), Orrin Hatch (R-Utah) and Amy Klobuchar (D-Minn.) as sponsors.
Schumer and Cornyn are notable in that they put forward a compromise proposal in the 113th Congress that was well regarded but ultimately failed to stop the first Innovation Act from being scrapped a year ago.
At the press conference, when asked why the senators believed they would have more luck with the legislation this year, Grassley specifically called out former Senate leader Harry Reid (D-Nev.) for failing to make it a priority. Leahy had similarly laid the blame at Reid's feet in an article in the Burlington (Vt.) Free Press last June.
The House's Innovation Act is generally considered to be driven by large firms in the high tech community, particularly in Silicon Valley. With the Senate version ratcheting back on some of the provisions considered potentially painful to patent owners, some push-back from high tech-related lobbying organizations was expected.
For the most part, however, the attitude of those groups was conciliatory, with press releases accepting the good news that some legislation now looks like it can move forward this year, even if it isn't perfect.
“This bill is an important step forward on patent reform that we believe will be effective in curtailing abusive litigation,” said Mark MacCarthy, vice president of public policy for the Software & Information Industry Association. “We strongly support the provisions that will improve transparency, create higher pleading standards, and enforce limits on document discovery. While we see areas for improvement, we believe that the combination of these components creates a strong reform package.”
“In particular, this bill includes consumer protections from abusive patent demand letter practices” according to Charles Duan, director of the Patent Reform Project at Public Knowledge. “Even more promisingly, we understand that the PATENT Act overcomes many of the problems we have raised with the TROL Act when it comes to patent demand letters, such as not preempting stronger state law protections.”
Most Innovation Act supporters, however, simply avoided any discussion of the bill itself.
The United for Patent Reform Coalition, a coalition whose membership includes a who's-who in Silicon Valley, issued a statement by a coalition member that is decidedly not Silicon Valley—the National Retail Federation.
“The sponsors of this legislation have shown genuine leadership by advancing several real solutions to the costly problems patent trolls inflict on America’s business community,” said NRF President and CEO Matthew Shay. “Trolls rob our economy of billions of dollars that would otherwise be invested in jobs, innovation, consumer savings and shareholder value. The legislation introduced today is the next important step in changing that.”
BSA | The Software Alliance is more in the middle, with members who are often bothered by trolls but also own important patents. BSA President and CEO Victoria Espinel applauded the sponsors' efforts in creating “truly bipartisan legislation that fundamentally improves our patent system, and encourage[d] the Senate to move this legislation forward quickly.”
The National Venture Capital Association has a similar position, because start-up companies need patents to get funding, but patent trolls frequently target start-ups, threatening a lawsuit that would tarnish a company's plan to go public or be acquired. But the NVCA's statement was significantly more positive than BSA's, and in fact stated clearly its preference for the Senate bill.
“We commend Chairman Grassley and his colleagues for their time and attention to this important matter,” said Bobby Franklin, NVCA president and CEO. “While we remain concerned that the Innovation Act of 2015 introduced in the House could be harmful to the entrepreneurial ecosystem, the PATENT Act is an encouraging step in the right direction and we are eager to dig in and review the details with our membership.”
Perhaps most surprising was the statement from the Coalition for 21st Century Patent Reform, whose members tend to come more from the life sciences and traditional technology industries. 21C has been clearly against the Innovation Act and appeared to see enough in the Senate bill to shift its view.
“In particular, the bill’s provisions on fee-shifting, fee recovery, early disclosures, motion-related discovery, pleadings and customer stays reflect welcome compromises to address the concerns of stakeholders while retaining their effectiveness to address abusive litigation practices that have no place in a properly-functioning patent system,” said Kevin Rhodes, 21C Coalition chairman and chief IP counsel for the 3M Co.
“It represents a significant, thoughtful and constructive contribution to the patent reform effort and 21C supports these provisions,” he said.
21C's only complaint was that the PATENT Act didn't include the provisions from Coons's bill that would address the reverse trolling abuses now playing out before the Patent Trial and Appeal Board at the Patent and Trademark Office.
But the Senate's move to provide more balance did not shift the legislation enough to please the Innovation Act's most ardent critic, the similarly named Innovation Alliance.
“While this bill incorporates some welcome improvements over earlier versions, we must oppose its adoption as introduced,” Innovation Alliance Executive Director Brian Pomper said. “Passage of this act would cripple the ability of legitimate U.S. patent owners to protect their ideas from infringers, both in the United States and overseas.”
The Innovation Alliance supports Coons's STRONG Act and the TROL Act as “targeted measures to stop abusive behaviors,” Pomper said. But, he said, “we fear the provisions of the PATENT Act, taken together, would tilt the playing field against our country’s most innovative enterprises, including individual inventors, start-ups, universities, and research and development-based technology companies.”
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Full text at http://pub.bna.com/ptcj/PATENTActIntro.pdf.
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