In the battle against “patent trolls,” two competing bills on Capitol Hill have emerged as the leading solutions to curb abusive patent litigation.
With different visions on how to fix the problem with the patent assertion entities, however, the authors of the two measures — the Patent Trans­parency and Improvements Act in the Senate and the Innovation Act in the House — will need to find common ground before any reforms can pass Congress.
House Judiciary Committee Chair­man Bob Goodlatte (R-Va.), the Inno­vation Act’s sponsor, is quickly moving ahead with his 51-page bill. Intro­duced Oct. 23, the legislation cleared the committee a month later on a 33-5 vote and now awaits consideration on the House floor.
The Patent Transparency and Improvements Act, which has the backing of the White House, is still in the Senate Judiciary Committee. Sen. Patrick Leahy (D-Vt.), the judiciary committee chairman, and Sen. Mike Lee (R-Utah) introduced the 30-page bill on Nov. 18.
“There’s no silver bullet that would fix the patent-troll problem,” said Julie Samuels, a senior staff attorney at the San Francisco-based advocacy group Electronic Frontier Foundation, which is fighting against patent assertion entities on behalf of tech companies.
For Russell Merbeth, Intellectual Ventures Management LLC’s chief policy counsel, the difference between the Senate and House bills boils down to patent litigation.
Merbeth, who lobbies for a patent holding company that its critics consider one of the largest U.S. patent trolls, said the House measure focuses more on fixes in the judicial system than the Senate legislation, which emphasizes ways to fight patent assertion entities outside the courts.
Goodlatte’s bill, for example, would require the litigation’s loser to pay for high-cost patent fights and create new rules about discovery, provisions that aren’t in the Leahy-Lee measure. The Senate legislation, however, has language that says the Federal Trade Commission could bring enforcement actions against patent assertion entities that send demand letters, which claim patent infringement due to the use of a product or service and call for a payment from the end-user to avoid litigation. Goodlatte’s bill does not go so far.
“We’re not sure patent litigation is the problem that needs to be addressed,” Merbeth said.
Caldwell Cassady & Curry principal J. Austin Curry, who helped obtain a $368 million patent-infringement verdict in 2012, said the Leahy-Lee bill is “more even-handed” than the measure working its way through the House.
The Senate legislation doesn’t try to fight patent trolls “in a way that punishes all patent holders,” he said.
Bernard Knight, who was the general counsel for the Patent and Trademark Office from 2010 to 2013, said the fee-shifting provisions in the Senate bill could make it more difficult to enforce and protect intellectual property for companies that aren’t the size of General Electric Co. or Microsoft Corp.
“If you are a small or medium-sized company, you may not have the financial ability to withstand losing the case, if it involves not only losing the case but make a big cash outlay for attorney fees and costs,” he said.
Aaron Cooper, who stepped down Nov. 8 as Leahy’s chief intellectual property counsel to join Covington & Burling, said Leahy and Lee worked hard to limit the amount of unintended consequences in their legislation. “It’s a tough balance,” he said.
But not all patent holders are against fee-shifting. The Electronic Frontier Foundation on Nov. 19 sent a letter to Congress that said fee-shifting makes “it rational for those threatened with an egregious patent suit to actually fight against the threat rather than paying what amounts to protection money.”
“We were very happy” to see the Innovation Act pass the House Judiciary Committee, Samuels said.
Despite the differences in the bills, common ground exists. Both measures have provisions intended to increase the transparency of patent ownership and provide for small-business education and outreach programs on patent trolls, among other commonalities.
And the Senate legislation might look closer to its House counterpart before it leaves the chamber.
Sen. John Cornyn (R-Texas), a member of the Senate Judiciary Committee, in May offered the Patent Abuse Reduction Act, which has fee-shifting and discovery provisions.
“I look forward to working through the Committee process with other Senators to develop effective legislation that will help innovators and inventors succeed,” Leahy said in a written statement at the time he introduced the bill.
It is unclear when a bill to fight patent trolls might land on President Barack Obama’s desk. Neither Goodlatte nor Leahy has released a timeline. But both of them have indicated that a legislative solution is a top priority.
Cooper said he expects Leahy to have a hearing on the Patent Transparency and Improvements Act before the Senate Judiciary Committee votes on the bill. But Cooper didn’t know if the hearing would happen this year.
As for the Innovation Act, the strong support the bill received in committee and Goodlatte’s desire to move the measure along quickly could bode well for a vote before the full House this year. “I think that’s entirely possible,” Cooper said.
Contact Andrew Ramonas at email@example.com. Todd Ruger contributed to this report.