Patent Reform Legislation Off The Table For Now

Patently BIOtech

If the mainstream media is to be believed, the patent system is broken.  This notion is frequently blamed on the perceived increase in so-called patent assertion entities (“PAEs”), referred to derogatorily as “patent trolls.”  More often than not, these media reports cite to a limited number of examples illustrating the perceived abuses, and reach the conclusion that patents are stifling innovation.  And, even though there has been serious disagreement about the extent of the problem, both the executive and legislative branches of the government have been working towards some version of patent reform.

Late last year, the House of Representative’s passed the Innovation Act aimed at curbing abusive patent assertion and litigation.  This bill moved through the House very quickly and passed by an overwhelming margin.  The Senate had been considering comparable legislation, but had been more deliberate in its action in a reported attempt to reach a compromise that could be supported by various stakeholders.

Nevertheless, in late May, Senator Patrick Leahy, Chairman of the Senate Committee on the Judiciary, announced that he was taking the Patent Transparency and Improvements Act of 2013 (S.1720) off the committee’s agenda.  He cited as the reason a lack of “sufficient support behind any comprehensive deal” to address the problem of so-called patent trolls who are misusing the patent system.  He pointed to “repeated concerns” that the House’s Innovation Act “went beyond the scope of addressing patent trolls, and would have severe unintended consequences on legitimate patent holders who employ thousands of Americans.”  Sen. Leahy indicated that “competing companies on both sides of this issue refused to come to an agreement” that would have provided the broad bipartisan support required to get a bill through the Senate.  Nevertheless, he promised that if the stakeholders involved “are able to reach a more targeted agreement that focuses on the problem of patent trolls, there will be a path for passage this year and [he] will bring it immediately to the Committee.”  A copy of Sen. Leahy’s press release can be found here (http://www.leahy.senate.gov/press/comment-of-senator-patrick-leahy-d-vt_chairman-senate-judiciary-committee-on-patent-legislation).

Despite Sen. Leahy’s comments, others have blamed Senate Majority Leader Harry Reid for the stalling of the bill.  The National Journal reported that Sen. Reid told Sen. Leahy that the patent reform bill would not even get to floor of the Senate, even if it passed out of Leahy’s committee (http://www.nationaljournal.com/tech/why-harry-reid-blocked-patent-reform-20140521).  The National Journal cited opposition from trial attorneys, the biotech industry, and pharmaceutical companies.  Sen. John Cornyn apparently agreed with the criticisms levied against Sen. Reid, complaining that “the demands of one special interest group” should not trump the patent reform desires of the White House, House Democrats, and the bipartisan agreement in the Senate.

Others organization joined in criticizing the Senate leadership.  For example, the Electronic Frontier Foundation (EFF) accused Sen. Leahy of killing patent reform, even if temporarily (https://www.eff.org/deeplinks/2014/05/senator-leahy-kills-patent-reform-now).  For its part, the EFF blamed the pharmaceutical, biotech, and university lobbies, complaining that these organizations “are hardly the victims of patent trolls anyway.”  Of course, the EFF failed to appreciate that, except for some exceptions for Hatch-Waxman-type litigation, the pending legislation would impact these organizations just as much as the so-called patent trolls.  To highlight its extreme position, the EFF went as far as to accuse universities of “sometimes fuel[ing] patent trolls.”

BIO and its constituent members had plenty of reasons to be concerned about the pending legislation that would not only have impacted the intended “patent trolls,” but would have impacted all patent holders.  The unintended consequences alluded to by Sen. Leahy could have had a chilling effect on, for example, biotechnology companies that require patent protection for their very survival.  BIO joined several other organizations, such as the Innovation Alliance and the Association of University Technology Mangers (AUTM) in sending a letter to the members of the Senate Judiciary Committee.  This letter stated that the signatories could not support the current changes being considered because they would have substantially weakened the patent system. The letter indicated that these organizations have been working with members of the Judiciary Committee to craft a bill that would target frivolous patent litigation.  Nevertheless, many of the current provisions would have had the effect of treating every patent holder as a patent troll.  The letter stated that a patent system that weakens that ability of every patent holder to enforce its own patents would discourage innovation.  The signatories concluded by opposing the legislation that the Judiciary Committee was considering, and asking that the members not support the proposed reforms.  BIO’s efforts appear to have been rewarded because most commentators agree that it is unlikely that there will be any patent reform legislation this year.

Andrew’s practice primarily consists of patent litigation, prosecution and opinion work in the biotechnology, pharmaceuticals and chemistry sectors. He is also a regular contributor on patent related issues to the Patent Docs blog.

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