Patent reform catches fire

A new push for patent reform has emerged just two years after Congress
approved sweeping legislation meant to reform the nation’s laws.

Once considered a pet issue for Silicon Valley, changing patent laws has become a high lobbying priority for bankers, retailers, restaurant owners, hoteliers and others who are concerned about the spread of frivolous patent lawsuits.

{mosads}Tech lobbyists said their phones are ringing off the hook from new allies who see their companies coming under threat from patent assertion entities, which critics refer to as “patent trolls.”

“New sectors are coming out of the woodwork. They are still are coming out of the woodwork,” said Matt Tanielian, co-founder of the boutique tech lobby firm Franklin Square Group.

In early May, more than 50 lobbyists from trade groups and companies gathered at Franklin Square’s office to discuss patent reform. Many of the attendees were from outside the tech industry, according to Tanielian.

“It was really an organic effort. This problem, patent trolls … is now expanding into other industries, and it’s happening rapidly,” Tanielian said.

Interest in the issue has spread beyond Franklin Square’s walls.

On Wednesday, the National Retail Federation (NRF) hosted a huge cross-industry powwow to discuss patent reform. Roughly 30 companies and trade groups with 50 different lobbyists were expected to attend the meeting.

Representatives for the American Hotel & Lodging Association (AH&LA), the Credit Union National Association, the Financial Services Roundtable, the Motion Picture Association of America, the National Cable and Telecommunications Association and the National Restaurant Association all said they planned to send people to the meeting.

“We are going to need a really big conference room,” Tanielian said.

Several trade group executives said their lobbying on patent issues has picked up significantly since President Obama signed major reform legislation in 2011.

“Our lobbying has picked up because we have heard from our members that this is a priority for them this Congress. It’s clearly not just a tech issue anymore, and so much of retail is now tech as well. We are just being targeted much more aggressively by the patent trolls,” said Beth Provenzano, the NRF’s senior director for federal government relations.

The so-called trolls are firms that buy up patents but don’t use them to make products. Instead, they shoot off letters threatening litigation against companies using similar technologies, hoping to scare up a cash settlement from those who can’t afford a lengthy court battle.

Over the years, businesses’ use of technology — from websites to computer software — has spread far and wide, creating a juicy target for lawsuits and settlements.

Trade groups say some of the technology targeted for patent litigation is mundane.

Retailers say they are being threatened with litigation over setting up an online shopping cart on their websites, while the hotel industry claims to have been targeted for using Wi-Fi devices and room reservation software.

Marlene Colucci, AH&LA’s executive vice president of public policy, said the hoteliers’ trade group spent “very little” time on lobbying on the 2011 patent reform bill, illustrating how quickly the issue has changed.

“We were only really monitoring it because it had not exploded as it has more recently,” Colucci said.

James Ballentine, chief lobbyist for the American Bankers Association, said his group planned to patch into the NRF meeting on Wednesday via conference call. The banking lobbyist said patent trolls have gone after several banking products and services, including ATMs.

“One of these patent trolls can send out a 1,000 letters, and they only need to get a hit from one. Some of the community banks especially can’t afford going through a lengthy legal process and just decide to settle,” Ballentine said. “It has wasted a lot of time. It has wasted a lot of money.”

Scott DeFife, executive vice president for policy and government affairs for the National Restaurant Association, said his trade group’s members have had litigation threatened over the use of Web apps, nutrition calculators and online ordering programs.

“The small business operator doesn’t have any idea of the lineage behind the technology he or she is using. They are just buying packages off the shelf,” DeFife said. 

The problem has grown by leaps and bounds. In a report released this week, the White House said the number of patent trolls lawsuits has tripled in the last two years, accounting for 62 percent of all patent litigation.

On Tuesday, President Obama offered several legislative recommendations to Congress and five executive actions on his own to help resolve the problem.

Patent reform legislation has also been introduced in both the House and the Senate, including several bills in May alone. House Judiciary Committee Chairman Bob Goodlatte (R-Va.) and Senate Judiciary Chairman Patrick Leahy (D-Vt.) last month put together a discussion draft for legislation that is likely to become the vehicle for change.

Some Democrats have resisted moving quickly on a new patent reform bill. In addition, the American Association for Justice, a lobby group for trial lawyers, has pushed back against some anti-patent troll legislation in the past.  

Nevertheless, Tanielian said he’s been astounded by the swift action from both ends of Pennsylvania Avenue.

“Pigs are flying at this point. That is a lot movement in one month,” Tanielian said.