Senate patent bill faces hard sell

Supporters of a new Senate bill believe it’s the best opportunity in years for Congress to crack down on so-called patent trolls, but a number of key stakeholders remain skeptical of broad reform. 

Senators unveiled a new patent reform bill last week that is similar to legislation working its way through the House, but key changes meant to win over detractors were only partially successful. 

“There will be special interests that oppose this,” said Sen. Charles Schumer (D-N.Y.), who helped negotiate the deal. “There will be people who don’t see beyond their own little narrow interest who say ‘no.'”  

{mosads}Lobbying on both sides of the issue has been intense in the past few years. 

Major technology firms — including Google, Oracle and Amazon — and retail companies have long pushed for broad changes to the patent litigation system to cut down on trolls, companies critics allege threaten frivolous patent infringement suits in hopes of scoring a payout.

But on the other side, skepticism of broad reform remains in industries that use patents differently and are less susceptible to such abuse, including lobbying powerhouses in the biotechnology and pharmaceutical industry. Universities have also opposed major changes.  

The Senate bill won tentative praise from some of those detractors. A coalition of six university groups called it a “substantial improvement,” while a coalition that represents a number of huge pharmaceutical companies said it includes “welcome compromises” but was not completely sold.

A number of difficult issues remain.

Sen. Chris Coons (D-Del.) vocalized the concerns in Congress, warning that “broad changes that undermine the ability of inventors to enforce their patent rights present serious concerns for our innovation economy.” A hearing scheduled for Thursday will allow other members to air their concerns. 

Coons has criticized provisions on fee shifting, discovery and pleading requirements, even with the modifications in the Senate bill.

One key issue for critics are the relatively new proceedings at the Patent and Trademark Office meant to offer a quick alternative to patent litigation claims. 

Coons specifically called out the Senate bill for not addressing what he sees as “well-documented abuse” in those proceedings.

The pharmaceutical industry in particular is demanding changes to the process for their support. Trade group 21C, which represents companies including Procter & Gamble, Pfizer, and Johnson & Johnson, said “any meaningful patent reform” must include changes to balance those proceedings.

The Pharmaceutical Research and Manufacturers of America was more direct, saying it would “have to oppose” any legislation that lacks those changes. 

The Innovation Alliance — another critic which represents Qualcomm and others — called out the Senate’s provision on “customer stay,” which is meant to allow retailers who use a patented product to delay an infringement lawsuit brought against them if the manufacturer of the product is also being sued.

“Congress must ensure that any ‘customer stay’ provision does not effectively immunize from liability large companies that use infringing technology and leave patent owners without redress for infringement by foreign manufacturers outside the jurisdiction of U.S. courts,” the group said.

Universities are also worried about provisions in the Senate bill that enable fee shifting and allow courts to go after the parent company of trolls who are set up as shell organizations. But the Senate bill narrowed that language, and removed the presumption that courts should force the loser of patent litigation to pay the winner’s legal fees. 

The university groups said they were still reviewing the bill but “are encouraged” by the changes. The 21C group offered similar praise for compromises on pleading requirements and limiting early discovery. 

Pressure from industry groups and trial lawyers, a traditionally Democratic constituency, helped scuttle reform last year when then-Senate Majority Leader Harry Reid (D-Nev.) ran the Senate.

Lawmakers last week said they might have had more meetings on the patent issue than any other in recent memory. 

“I had the privilege to meet with about 50 patent lawyers in Minnesota — that was a lot of fun — and I realized there are a lot of differences on this issue, which you have seen in the long journey this bill has taken,” said Sen. Amy Klobuchar (D-Minn.) another sponsor of the bill. 

But both sides concede their work though may not be done.

— This post was clarified to note the Judiciary hearing is scheduled for Thursday.