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Policy


Tech industry hopes for a solution to the problem of patent trolls became more illusive Wednesday when lawmakers gave up on patent legislation after being unable to reach a compromise on some details.

Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., announced Wednesday he’s pulling the patent troll legislation for the foreseeable future because of an inability to resolve some outstanding issues.

“Unfortunately, there has been no agreement on how to combat the scourge of patent trolls on our economy without burdening the companies and universities who rely on the patent system every day to protect their inventions,” Leahy said in a statement.

As we noted recently, a disagreement between tech companies and universities over “fee shifting,” or who pays the legal fees when patent troll lawsuits fail, has been a stumbling block for lawmakers. It was one of a handful of issues that have divided senators in recent weeks as they tried unsuccessfully to reach a compromise.

The Senate bill was similar to legislation that easily passed the House in December, both aimed at reducing lawsuits brought by non-practicing entities, or patent trolls.

Leahy’s decision to pull the legislation wasn’t totally unexpected since he had previously delayed committee action on the measure five times while lawmakers tried to placate concerns raised by tech and pharmaceutical companies, academia and other industries (retail, financial services, etc.) with a stake in the debate.

But industry groups representing technology, retail and financial services companies expressed disappointment and some surprise at Leahy’s decision.

People close to the negotiations said that they thought they were close to a deal when Leahy pulled the plug. They said Senate Majority Leader Harry Reid shut down the effort on behalf of pharmaceutical firms and trial lawyers by making it clear that a compromise bill wouldn’t be given floor time for a debate. A spokesman for Reid did not respond to a request for comment.

Sen. Chuck Grassley, R-Iowa, said he was “surprised and disappointed that the Senate Democrat leadership is not willing to move forward on a bill that we’ve worked on so hard and were ready and expecting to mark up tomorrow.”

The Coalition for Patent Fairness, which counts Google, Oracle, Verizon and Cisco among its members, said that “patent trolls and their special interest allies are the only winners today.”

The Internet Association, which represents Internet companies including Google, Facebook and Amazon, said it was “deeply disappointed” by the decision and said that if the Senate Judiciary Committee couldn’t act, Reid should bring the House bill that passed last year to the floor of the Senate for a vote.

Meanwhile, the National Retail Federation called the decision a victory for patent trolls and said in a statement it too was “deeply disappointed that groups representing the status quo have continued to stall and stymie attempts at effective patent reform.”

On the other side of the debate, the Biotechnology Industry Association, which represents Amgen, Pfizer and other pharmaceutical companies, said lawmakers should hold off on action “until greater stakeholder consensus can be achieved.”

University associations said in a statement that the Senate Judiciary compromise would “substantially weak all patents and the rights of patent holders large and small” and applauded the decision to shelve the plan.



1 comments
Gary Lauder
Gary Lauder


This is just a temporary deferral since the forces lobbying for this are too powerful and are spending too much money lobbying for this to disappear for long.


The unwritten story here is how it could be that the poor innocent shopkeepers, small start-ups and podcasters could be spending $10's of millions lobbying this.  Hint: they aren't.  They are used as "innocent victims" by some very large companies who are seeking to weaken the patent system for all inventors.


When the America Invents Act (AIA) passed in 2011, it was a compromise between big companies (mostly pharma vs. anti-patent crowd (SW, internet, banks, cable & telcos, etc.)) and the net result was harm to the interests of small companies/tech entrepreneurs who need patents (note: most small companies don't, but for others' it's existential).  Small companies are always under-represented in DC.  It will be the same here.


Another factor that may have de-prioritzed pushing this legislation at this time is that the "troll problem" has been overstated (although it is real) and it's being dealt with in other ways by other parties.  

Overstatement: 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2346381 

http://www.managingip.com/Blog/3247850/Patent-trolls-and-barking-dogs.html

http://j.mp/Junk-Science

Being dealt with in other ways:

http://www.ipwatchdog.com/2014/03/14/is-more-patent-reform-really-necessary/id=48497/

http://www.ipwatchdog.com/2014/05/05/easing-the-standard-for-recovering-attorney-fees-in-patent-cases/id=49412


Patents serve an ongoing useful function in our society, but as reported in most media, it's perceived to be mostly parasitic.  This echo-chamber of misinformation will ultimately result in our becoming like most of the rest of the world with a neutered patent system that is the sport of kings (i.e. big companies).  There are injustices from trolls, but the more common, more pernicious and more harmful injustices are the daily knock-offs of innovators by copiers.  These don't get publicity.  Without a strong patent system, this will worsen and discourage that type of technology entrepreneurship and VC investing that has made our economy so unique and created economic mobility that was the envy of the world.


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