By Kevin Bogardus - 03/16/09 07:02 PM EDT
The move comes three years after the maker of the BlackBerry paid about $612 million to settle a patent lawsuit that threatened to put the company out of business.
“When you have had a high-profile case like that, you become a poster child for why patent reform is needed,” said Ralph Hellmann, chief lobbyist for the Information Technology Industry Council (ITI), a tech trade association. “It is immediately something every lawmaker or staffer can relate to because it is something that is integral to their lives. It is in everyone’s hands.”
The Virginia-based firm NTP brought the suit against the BlackBerry, arguing RIM had infringed on its patent and demanding $1 billion. Inventors with NTP hold patents for several different wireless e-mail systems, and have sued other mobile device makers, including Palm Inc., for patent violation.
During negotiations between the two companies, there were fears that RIM would be ordered to end BlackBerry service, which would have cut many lawmakers and their aides from their mobile e-mail devices. Concerns ran so deep that the Justice Department filed a brief in the court case telling the judge that turning off the devices could severely limit the federal government’s capabilities.
The two companies eventually reached a settlement in March 2006 in which RIM agreed to pay NTP more than $612 million in exchange for allowing RIM to continue its BlackBerry business.
“The RIM case was the wake-up call,” said Rob Atkinson, president of the Information Technology & Innovation Foundation, a think tank that focuses on policies that encourage innovation. “It was clear you could extort a company for incredible amounts of money that could prove damaging to them in the long term.”
But opponents of the bill said the RIM case does not mean patent reform is necessary, pointing out that courts have been able to handle litigation.
Bill Mashek, a spokesman for the Coalition for 21st Century Patent Reform, a group of manufacturers and pharmaceutical companies, acknowledges technology groups use the BlackBerry case as a “poster child” for their arguments.
But he argued courts have often lowered damages sought in litigation.
“You see the issues being addressed by the courts. The case for legislation to reduce patent damages has not been made,” he said.
Mashek said only a handful of patent cases have resulted in more than $100 million in damages awarded. In addition, the median damage award from patent suits has not gone up, while the number of patent cases was down in 2008, he said.
Tech lobbyists often refer to the BlackBerry patent lawsuit when pressing their arguments that Congress should pass new patent legislation. Hellmann often points to his own BlackBerry device when lobbying lawmakers.
“I am always carrying one around,” Hellmann said. “You can’t help but say, ‘You see this? It was subject to thousands of lawsuits.’ ”
RIM has added two outside firms to lobby on the patent reform bill.
Beto Cardenas, a former general counsel to Sen. Kay Bailey Hutchison (R-Texas), is working on the RIM account for Vinson & Elkins, which was registered to lobby specifically on the patent reform bill, according to lobbying disclosure records.
The company has also hired Clark Lytle & Geduldig, where Sam Geduldig, once a senior adviser to Rep. Roy Blunt (R-Mo.), lobbies for the company on patent reform and other issues.
RIM also bulked up its in-house lobbying shop last year, hiring Brian Peters, a former ITI lobbyist and aide to Rep. Jay Inslee (D-Wash.).
“Following its rapid growth in recent years, RIM’s expansion of its relatively small lobbying resources is a reflection of the company’s overall business growth in the United States, as well as an ongoing industry need for patent reform,” said RIM in a statement. “RIM will specifically advocate aspects of reform that would enhance patent quality by ensuring that patents have documented and substantiated evidence of merit before the patents are granted or recertified as part of the review process.”
RIM is one of the few companies expanding its workforce during the recession. After hiring 4,000 people last year, the company announced that it is looking for 3,000 new recruits this year.
The company is not unfamiliar with K Street. It has spent more than $3 million on lobbying fees since first registering in 2006, according to lobbying disclosure records.
Mehlman Vogel Castagnetti and McKenna, Long & Aldridge have been lobbying for the company for several years now.
In April 2006, just a month after the lawsuit was settled, RIM Co-CEO James Balsillie told a House panel his company was encumbered by the litigation.
Opponents of patent reform legislation believe the bill introduced by Sen. Patrick Leahy (D-Vt.) and Rep. John Conyers Jr. (D-Mich.) could weaken the patent system by reducing the amount of damages awarded in infringement cases. That could drive investment, capital and jobs overseas, they argue, since their products could not be protected under the U.S. patent system.
Tech advocates argue the patent reform bill is necessary because companies are too often tied up in lawsuits. That takes time away from developing and inventing new products, which would lead to new jobs.
“They are having to spend an enormous amount on patent attorneys and lawsuits. Obviously, a share of that would go back into research and development,” Atkinson said. “It has become a tax on U.S. innovation.”
Congress may struggle to complete patent reform legislation this year. Delays in appointing key figures to the Obama administration, including the president’s nominees for Commerce secretary and U.S. Patent and Trademark Office director, who has not been named yet, could stall action. Lawmakers have said they want to hold the bill back until they hear from the new PTO director.
Still, Leahy is moving to act quickly, scheduling a markup of the legislation for Thursday.