Senate patent compromise in 'final stages'

The Senate Judiciary Committee is close to compromise on its patent reform bill and is expected to announce an agreement later this week.

"I hope we are in the final stages of hammering out" a patent reform bill "that is the result of true compromise between all sides," Chairman Patrick Leahy (D-Vt.) said during a committee meeting Thursday.

The committee is considering a bill from Leahy and Sen. Mike Lee (R-Utah) that would aims to curb “patent trolls,” the companies that profit by bringing and threatening to bring frivolous patent infringement lawsuits.

While the original bill would do so through steps like increasing transparency in the litigation process, other members of the committee have been working with Leahy to attach their provisions.

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On Thursday, Leahy reiterated his support for “fee-shifting,” a measure that would require the losing party of meritless patent lawsuits to pay the winner’s fees.

Republicans on the Judiciary Committee — led by Rep. John Cornyn (R-Texas) — have pushed Leahy to include the measure in his bill as a way to deter frivolous lawsuits, but others have said the penalties could prevent inventors from bringing legitimate infringement lawsuits.

During Thursday’s hearing, Leahy said the fee-shifting measures “are not the kind of provisions I would consider in other contexts except for in the patent system.”

He contrasted fee-shifting in patent litigation to broader litigation reforms that he would not support. “I am not one of those that falls into the category of tort reformer,” he said, but fee-shifting has “some merit in this context.”

“Patent trolls who pursue lawsuits with no reasonable basis should be required to pay reasonable attorneys fees,” but judges should “have some role in determining” when to require fee-shifting, he said. 

Leahy also said he is working to incorporate a proposal from Sen. Orrin Hatch (R-Utah) that would require a company bringing a patent infringement suit to put up a bond for the loser’s fees.

Leahy said he is working with Hatch on the provision “to address the problem of shell companies that cannot be held accountable,” but that provision “has proven to be quite complicated.”

“I hope we will come together on an agreement in the next day,” he said in his prepared statement, to be posted as a manager’s amendment on the committee’s website and considered at a meeting on Tuesday.

Committee members, including ranking member Sen. Chuck Grassley (R-Iowa), applauded Leahy for delaying consideration of the bill.

“Getting the bill right is just as important as moving it,” Grassley said.

Lee said his office was continuing to work on other contentious proposals to ensure they “appropriately and narrowly target patent troll behavior.”

Specifically, Lee pointed to a provision that would require transparency in the demand letters that patent trolls use to threaten litigation and a provision that would allow a tech company to intervene when its customers are sued for infringement.

Lee said he is “working to address concerns from both sides” on those provisions.

Sen. Charles Schumer called for more transparency and simplicity in demand letter. “You shouldn’t have a three sentence demand letter plunge somebody into a vortex of litigation,” he said.

Schumer also repeated his calls for additional scrutiny for software patents. 

Under a proposal he has pushed since last year, companies being sued for infringing on software patents would be able to ask the Patent Office to review the validity of those patents as a way to weed out the vague and broad software patents often used by patent trolls.

Schumer said he would introduce his proposal as an amendment to Leahy’s bill but understands the slim chances it will face due to opposition from large tech firms like Microsoft and IBM.

“I think [it's] is the ideal solution, and I'll offer it, but I know that it doesn’t have broad support,” he said.

Sen. Dick Durbin (D-Ill.) warned against an overbroad and overreaching bill and said any bill to curb patent trolls should protect legitimate patent holders.

“We spend so much time focusing on trolls,” he said. “We need to make sure we preserve the ability of legitimate patent holders” to defend their intellectual property rights.