Obama pressures Democrats to take on ‘patent trolls’

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Business groups and the tech industry cheered Obama for bringing attention to the issue.

Marla Grossman, a lobbyist with American Continental Group, which supports addressing patent abuse, said that even if Democrats don’t endorse the president’s proposal, it “encourages them to come to the table and explore options.”

“Whenever the president makes a step like this and raises the profile of an issue it has an impact on the Hill,” said Michael Beckerman, the CEO of The Internet Association, a lobbying group that represents Google, Facebook and other tech companies.

The White House’s legislative proposal would give courts more discretion to penalize firms for frivolous patent infringement lawsuits and would provide stronger legal protections for consumers and businesses using off-the-shelf products.

An administration official said the White House is targeting “illegitimate or shaky patent claims that are designed to extract settlements.”

Many businesses agree to settle in patent lawsuits because the costs of fighting in court are so high. One Boston University study found that patent trolls cost businesses $29 billion in legal fees in 2011 alone, and the White House said that patent trolls now account for 62 percent of all patent lawsuits.

Although members of both parties have proposed bills to crack down on the patent trolls, trial lawyers and some House Democrats have expressed concern that legislation could thwart legitimate lawsuits.

At a Judiciary Committee hearing in March, Rep. Mel Watt (D-N.C.) expressed concerns that without a proper definition, lawmakers will “impact adversely a bunch of people we should not be impacting.” Rep. Hank Johnson (D-Ga.) warned that legislation targeting patent trolls could open the door to deny plaintiffs “their right to go to court in other tort situations.”

Rep. John Conyers Jr. (D-Mich.), the Judiciary Committee’s ranking member, has said he suspects the tools to address patent trolls already exist.

In a joint statement to The Hill on Tuesday, Watt and Conyers pledged a hearing on the patent troll issue, but said lawmakers “must carefully weight the ramifications of any proposal of a co-equal branch of government that may unduly burden access to the courts.”

“Now that the Administration has submitted its views on patent litigation abuse, our responsibility continues to be to determine if the patent litigation problem rises to the level to support a legislative response,” Watt and Conyers said.

“The Government Accountability Office will soon release its patent litigation report, which will assess the scope of the problem, and a Judiciary hearing should follow shortly thereafter to develop an informed, targeted response.”

The American Association for Justice, an advocacy group for trial lawyers that has pull with Democrats, warned earlier this year that one anti-patent-troll bill, the Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) ACT, would “have a chilling effect on innovation and small businesses by unfairly stacking the deck in favor of corporate giants.”

“No one doubts that problems exist within the current patent system, but the SHIELD Act will only make a troubled system worse,” John Bowman, the group’s top lobbyist, said in a statement.

The SHIELD Act was sponsored by Reps. Peter DeFazio (D-Ore.) and Jason Chaffetz (R-Utah). Sens. Charles Schumer (D-N.Y.) and John Cornyn (R-Texas) and Rep. Ted Deutch (D-Fla.) have all also introduced bills targeting patent trolls.

The proposal most likely to begin moving in Congress is a draft from House Judiciary Committee Chairman Bob Goodlatte (R-Va.) and Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.).

Their proposal would limit the kinds of documents that firms could force their opponents to produce during the discovery phase of a trial, a major cost in patent litigation. It would also allow the manufacturer of a product to intervene to block cases against its customers over alleged patent infringement and would make a series of changes to the Patent and Trademark Office aimed at helping small businesses participate in the office’s decisions.

The proposal received a cold reception from the House Democrats when it was unveiled last month.

Asked about the Democratic resistance to the Goodlatte-Leahy bill, an administration official said it’s “always the right time” to encourage innovation and economic growth.

Grossman noted that the House Democrats never said they would oppose any patent troll legislation.

“I think they purposefully left themselves an opening that, if the need were demonstrated, they would be open to discussion and consideration,” Grossman said.

The administration official emphasized the White House proposal was not meant to limit people’s ability to pursue legitimate patent claims, and said that firms that buy and sell patents can have a positive economic impact.

The official declined to take a position on the Leahy-Goodlatte draft bill, but said the White House’s goal is to “help shape the legislation” and “enrich the discussion.”

“We are encouraged by the bipartisan approach that’s being taken,” the official said.
 
— Amrita Khalid contributed.