Under Obama, tech corps hopeful for patent reform

With President Obama in the White House, tech companies have more hope they’ll win this year’s fight over patent reform.

Tech companies have been pushing for a revamp of the nation’s patent laws for several years. Lobbyists for Silicon Valley argue that their companies have seen their innovations bogged down in expensive, frivolous lawsuits that take their scientists and engineers away from the lab too often.

Opposition led by pharmaceutical companies, however, appears even more organized for the fight over the patent reform bill, introduced last week by Sen. Patrick Leahy (D-Vt.) and Rep. John Conyers Jr. (D-Mich.).

Drug makers, teamed with manufacturers and their unionized employees, are worried the bill could weaken the patent system by reducing damages awarded in lawsuits to the point that companies will move production overseas.

Obama seems willing to jump into the debate. On the White House website, Obama says the country must reform its patent system and “reduce uncertainty and wasteful litigation that is currently a significant drag on innovation.”

That has played well with tech interests, who say lawsuits prevent their companies from innovating and creating jobs.

“This administration has said they were for innovation on the campaign trail and in the White House,” said Steve Elmendorf, a lobbyist for the Coalition for Patent Fairness, a group of tech companies in favor of the bill. The Bush administration, he said, was not helpful.

“The last administration was hostile to this, from the White House to the Commerce Department to the [U.S. Patent and Trademark Office (PTO)] director,” said another tech lobbyist, who asked to speak on background to be more candid. “Obama, on the campaign trail, said we needed to reform the patent system. It was vague, but at least it showed some initiative to dive in.”

A spokesman for the White House declined to comment on the pending legislation.

Opponents of the bill stressed that Obama is not the force behind it. They said Leahy and Conyers, chairmen of the Judiciary committees in their respective chambers, are the main players.

“I wouldn’t read too much into campaign statements or otherwise. I don’t know where they are right now,” said Mike Wessel, a lobbyist for the United Steelworkers of America, a union that has concerns about the bill.

“But with both chairmen dropping the bill, and it being fairly important last year, they are going to have to look at it fairly early,” Wessel said.

Leahy is motivated to move the bill. He held a hearing on his legislation on Tuesday, and called it a top priority for his committee, though he has yet to schedule a markup. Negotiations fell apart last Congress after the panel’s ranking member, Sen. Arlen Specter (R-Pa.), backed away from the bill when Leahy rebuffed his push to confirm President Bush’s judicial nominations.

Several senators on Leahy’s own committee, however, have asked him to slow the bill down. In a letter Monday to Leahy, seven senators on both sides of the aisle asked the chairman to hold another hearing to determine the views of Obama’s PTO director, who has not been nominated, before proceeding.

“That would allow us to explore further what Congress can do to improve patent quality, which could result in stemming the tide of speculative litigation that proponents claim drives the need for this bill,” wrote Sens. Tom Coburn (R-Okla.), Russ Feingold (D-Wis.), Jon Kyl (R-Ariz.) and Ron Wyden (D-Ore.), among others.

Specter voiced similar concerns in a letter last week to Leahy, telling the Vermont Democrat to wait for Obama to nominate not only a PTO director but also the undersecretary for Commerce before moving further on the bill.

The bill has the chance of fomenting a perfect storm between Democrats, with several constituencies that lean toward the party — unions and tech companies — staking out opposite sides on patent reform. But lobbyists on both sides said the bill is not a partisan issue.

“This is a constituent-driven issue, a jobs issue. The question for members of Congress is where the jobs lie in your district or state,” said Stan Fendley, a lobbyist for Corning Inc., a manufacturer that has worries about the bill.

That point was driven home Monday in a letter to lawmakers from more than a dozen unions. While expressing a desire to find consensus, the labor groups said studies suggest the bill in its current form could endanger between 51,000 and 298,000 manufacturing jobs and represent a value reduction for U.S. public companies of between $38.4 billion and $225.4 billion.

Tech companies contend they have been a principal driver of the economy over the past several years, and reforming the patent system would encourage them to innovate even more.

“The patent system has not been refreshed for 50 years,” said BJ Watrous, an associate general counsel for Hewlett-Packard. “We do feel patent reform could be part of a grander vision in building a stronger economy.”

Another economic study says if patent reform legislation were to pass, 100,000 new jobs for the high-tech sector would be created and 150,000 more would not be lost.