A bill aimed at cracking down on “patent trolls” has stalled almost a year after it was reintroduced with fanfare by House Republicans after conservative groups, universities and businesses warned that the legislation will harm innovators.
Last February, Rep. Bob Goodlatte, Virginia Republican and chairman of the House Judiciary Committee, reintroduced the Innovation Act, which in late 2013 passed the House with a massive, bipartisan vote of 325-91. The bill then died in the Senate.
The latest bill, H.R. 9, passed the Judiciary committee in July by a 24-8 vote, and Mr. Goodlatte said passage of the Innovation Act “remains a priority” for his committee.
“The legislation is the product of much bipartisan work and I am proud that it was reported out of the Committee by an overwhelming vote and is supported by over 350 groups,” Mr. Goodlatte told The Washington Times.
“The bipartisan nature of the bill makes it an ideal candidate for floor consideration this year,” he added.
But critics say they have raised so many questions about the bill that it has prompted Republican lawmakers previously in favor of reform to pause — and critics are now highly skeptical that it will ever see the Senate floor, much less make it to the White House before the end of the Obama administration.
“Inventors, medical devices, biotechnology companies, universities, venture capitalists and conservatives, to name just a few, all oppose the House bill,” said Brian Pomper, executive director of the Innovation Alliance, a coalition of research and development-based technology companies representing innovators, patent owners and industry stakeholders.
Given the objections, “it is hard to imagine why the leadership would want to bring the bill back to the floor this year,” said Mr. Pomper.
The Innovation Act seeks to discourage “patent trolls” — shell companies that buy up vaguely worded patents with the intent of suing innovators for infringement by shifting legal costs to the losing party in a patent lawsuit.
The proposed law would attack these “trolls” by requiring the plaintiffs to identify the owner of a patent before a lawsuit is filed, and offer a reasonable explanation for filing the suit. It would also require courts to determine the validity of patent cases earlier in the process.
But opponents of the bill say Congress is overreaching to correct an isolated problem that could be solved within the court system.
“There are a thousand more sensible ways to do this than completely upending the system,” said Richard A. Epstein, a respected law professor at New York University School of Law who has taught extensively on patent law.
“If you want to handle patent-litigation legislation, it would be better to handle it more generally with litigation rules rather than trying to completely wreck the system,” Mr. Epstein said.
Critics also argue that lawmakers who still support the bill are not considering how the proposal could unintentionally weaken property rights for startups and small innovators.
In a Jan. 27 letter to Congress, members of several conservative groups, including the American Conservative Union, Eagle Forum, U.S. Business and Industry Council and US Inventor, argued that the bill’s sponsors were trying to push it through the chamber by falsely labeling it a “tort reform” bill.
“The proponents wrongly call this ‘tort reform.’ It is not,” the 25 group leaders wrote in the letter.
They argued the patent-reform bill makes the patent-litigation process “so one-sided — in favor of the infringer, or thief — that the intellectual- property owner has small prospect of ever attaining the real value of the invention.”
Mr. Pomper said the same groups that opposed the original bill in 2013 are now speaking out about another argument that helped the Innovation Act make it as far as the Senate in the first place.
“There were some who worked hard to push a false narrative that the House bill that passed overwhelmingly in 2013 didn’t move in the Senate in 2014 because the trial lawyers succeeded in getting [Senate Minority Leader] Harry Reid to stop it for them. That was simply never true. The truth is that the same broad coalition that opposes the House bill now opposed it then, and that kept the bill from moving in the Senate,” said Mr. Pomper.
And data suggest that tort reform might not even be necessary to combat trolls.
A Lex Machina study found that patent-litigation rates have declined steadily, and are back to 2009 and 2010 levels.
In relation to the number of patents being granted — the number of new utility patents issued for inventions in the U.S. has increased by 62 percent in the last decade — patent litigation has remained at a steady level of less than 2 percent.
What the controversial bill does not do, according to critics, is protect innovators from being harassed by patent trolls who send out hundreds of demand letters threatening expensive litigation for patent infringement.
“We recognize that there are real problems out there — demand letters are a real problem and we want it solved,” said Dan Schneider, executive director of the American Conservative Union.
“There are things that should be done, but not a single one of our recommendations was included in Chairman Goodlatte’s final bill, which signaled to us that he’s not actually looking to address the problems with his own legislation,” he said.
Mr. Epstein echoed Mr. Schneider’s disappointment in Mr. Goodlatte’s willingness to make adjustments to the bill.
“The problem about Mr. Goodlatte is he’s dense on this issue,” Mr. Epstein said. “How can you possibly vote for a failed bill and never think once about the fact, ‘maybe somebody on this very same complicated set of choices has thought of something which I, in my divine wisdom, have missed.’ “
The Innovation Act “does nothing to address the real problems that exist, it does nothing to deal with demand letters — and it makes it harder to protect property,” Mr. Schneider added.
In addition to conservative groups and inventors, many universities also oppose the bill because it would be detrimental to their research licenses.
Universities “can’t manufacture anything, but they are very good at licensing things that are manufactured,” Mr. Epstein said.
While the bill is not completely dead, it seems nearly impossible for it to travel any further in the legislative process, say the critics, who say they have been able to sway many lawmakers, especially Republicans, to reconsider their votes.
“I am most encouraged by the number of members of Congress [who] may have reluctantly voted for the initial bill in the previous Congress, but who are now stepping back and saying this thing is not ready for prime time; it has to be fact-checked so that we can solve the real problems and not cause additional harm,” said Mr. Schneider.
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