Friction tests patent reform push

The tech industry is making an aggressive push to get patent reform across the finish line as senators haggle over the details of the legislation.

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The House has already passed a reform bill, and Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) hopes to mark up legislation this week that would crack down on so-called “patent trolls” — companies that profit by bringing frivolous infringement lawsuits.

While lawmakers and tech companies broadly agree about the need to cut down on abuse of patent litigation, negotiations among senators over Leahy’s bill have grown contentious, sources close to the talks say.

One area of disagreement is a provision on “fee shifting” that committee Republicans want to add to the bill. The provision would require the losing party of a meritless infringement lawsuit to pay the winning party’s legal fees.

Several lobbyists said consensus on the bill — between both lawmakers and the various industries involved — is proving difficult, and the markup could be delayed.

“Talks are on life support because the principal negotiators seem to be miles apart,” said a lobbyist for a software company, who asked for anonymity because he is not authorized to speak publicly about the negotiations.

“The bill is in danger of not moving forward; a lot of staff on both sides has reached the limit on the amount they can take.”

Lawmakers have come up with several drafts of how to deal with fee shifting, each of which has been floated from Capitol Hill to K Street, in hopes of garnering support from the various industries that have a stake in the bill, according to people involved in the talks.

“There is a sense of frustration with the fee-shifting issue,” the lobbyist, who has been involved with the negotiations, said. “That frustration has led to an impasse.”

With Congress heading off for a two-week recess on Friday, the window for action is narrowing. With midterm election politics set to intensify this summer, action on the bill could get tricky.

Last week, Sen. Charles Schumer (D-N.Y.) said that he was optimistic the Senate could pass a patent reform bill before the November elections, if the Judiciary Committee could move a bill by the end of April.

As Leahy hits roadblocks on the bill’s fee-shifting provision, Schumer is working on his own to get negotiators to compromise, according to the corporate software lobbyist.

Despite the multiple delays, many in the tech industry are hopeful that the bill will see the light of day.

“I don't think it would be the end of the world if it didn't move forward before Easter break,” the software lobbyist said. “Staff will continue to work over the recess in the hope that they can bring something to their bosses.”

Liz Garner, the director of commerce and entrepreneurship at the National Restaurant Association, said she’s optimistic that the differences can be resolved.

“You have some very ideologically different people who are negotiating the ‘Manager's Amendment,’ ” she said, referring to the package of amendments to the legislation that senators from both parties are attempting to broker. 

“If they can get past the ideological hurdles, that's a strong indicator they can get something all the way through the Senate process and to the president's desk.”

Tech companies and their allied groups are pushing hard for strong patent reform measures that cut abuse of the patent litigation system and increase transparency.

The six main industry coalitions leading the fight — including the Coalition for Patent Fairness and the Coalition for 21st Century Patent Reform — spent a total of $2.34 million on lobbying last year, according to data compiled by the Center for Responsive Politics. Some of the groups have big-name firms, such as K Street powerhouse Akin Gump, on retainer.

On Monday, the Main Street Patent Coalition — which includes the National Retail Federation, the Application Developers Alliance, the National Restaurant Association and other tech and retail trade groups — held a briefing on the Hill to push for patent reform.

Last week, the Consumer Electronics Association and start-up advocacy group Engine hosted a fly-in for entrepreneurs to lobby on tech issues, including patent changes.  

Engine Executive Director Julie Samuels noted the difficulty of advocating on patent reform with Leahy’s revised version still in flux.

“There are a whole bunch of people who really care what this process looks like,” she said, “but it’s incredibly difficult to weigh in when its all being done behind closed doors.”

The advocacy efforts of groups like Samuels’s are matched by opponents of patent reform, who say Congress is moving too fast and needs to consider the issue more carefully.

Last week, the Alliance of U.S. Startups and Inventors for Jobs (USIJ) brought in inventors to take a go-slow approach to patent reform.

“Legislation this important and this complicated, we’ve never seen it go through the Congress this quickly,” USIJ Chairman Charles Giancarlo said.

“There are so many things floating around; it’s very difficult to see what it might look like.”

Regardless of what the Judiciary Committee ends up considering, Giancarlo said there would be “serious concerns … now that we’ve educated Judiciary members,” and he predicted “a bigger fight if it gets into the Senate as a whole because we’ve been educating senators from across the board.”

Also last week, tech giants Apple, Microsoft and IBM teamed up to form a trade group to lobby for strong protections for software patents.

While the group has avoided commenting on specific legislative proposals, the group’s adviser — former Patent Office Director David Kappos — warned against reactive measures that could harm the patent system.

“Now is not the time to gamble with America’s innovation engine — once patent protections are eliminated, they cannot be restored,” Kappos said in a statement, urging policymakers to “move beyond rhetoric that 'the system is broken and trolls are bringing businesses to a complete halt' to a discussion of calibrated improvements.”

One lobbyist in the tech industry said the release of the statement from Kappos was “interesting timing.”

“We’ve gotten to the point where its clear that the Senate is going to act — the details of which are not entirely finished — but maybe they see that its going to happen.”