OVERNIGHT TECH: Patent deal looking unlikely in time for markup

THE LEDE: With a little over 36 hours to go before Thursday's scheduled markup, observers are less and less convinced that Senate Judiciary Chairman Patrick Leahy (D-Vt.) can pull together a compromise on his patent bill in time.

Leahy has been working for the better part of this year to find a middle ground between his Patent Transparency and Improvements Act and the contentious patent reform proposals committee members are hoping to attach to the bill as it moves through the Senate.

One of those contentious issues Leahy is currently dealing with is the issue of “fee-shifting.” That measure would require the loser of an unreasonable patent infringement case to pay the winning party’s fees.

While Senate Republicans, including Sen. John Cornyn (R-Texas), say the measure would cut down on frivolous lawsuits and the threat of litigation, some Democrats on the committee worry that it will close the courtroom door to innovators who would not be able to pay the other party’s legal fees if they lose. The House patent reform bill that passed last year — the Innovation Act from House Judiciary Chairman Bob Goodlatte (R-Va.) — included a fee-shifting measure.

In recent weeks, Cornyn has been working with Sen. Charles Schumer (D-N.Y.), a vocal advocate for patent reform, to reach a compromise on the fee-shifting language and other provisions, as Leahy has repeatedly pushed back his committee’s consideration of the bill. Though a draft of their language was circulated before the most recent recess, observers say the compromise hasn’t been enough to get the bill over the finish line in time for Thursday’s meeting.

“There were so many concerns voiced about the Cornyn/Schumer draft... that I think if we do not see a manager’s amendment soon that can be carefully reviewed by the members as well as the stakeholders, it is unlikely that a successful markup could happen this Thursday,” one patent lobbyist said Tuesday.

Though Leahy had pledged to introduce a manager’s amendment representing a compromise between committee members when the chamber returned from recess on Monday, he has not yet done so.

A Senate Judiciary aide said Leahy “is continuing work with other members to address constructive comments from both sides about the legislation” and “is encouraged by the progress that has been made over the recess and will continue work this week on the manager's amendment.”

Meanwhile, advocacy organizations and trade groups have been upping their lobbying war over the issue.

Nearly 200 universities, startups and other companies sent a letter on Tuesday warning about potential changes that go “far beyond what is necessary or desirable to combat abusive patent legislation and in fact would do serious damage to the patent system.” The groups feared that an over-aggressive reform could “shortchange the future of our economy for a premature, unbalanced policy.”

On the other side of the equation, Small Business Majority unveiled a new poll showing that small business overwhelmingly backs more sweeping changes to the current rules. For instance, 77 percent of the companies support new protections for end users and 73 percent back punishments for abusive or fraudulent demand letters. 

Wheeler fears delay on new neutrality:  In a lengthy blog post on Tuesday, Federal Communications Commission (FCC) Chairman Tom Wheeler said that he’s moving forward with the commission’s draft net neutrality regulations to prevent companies from operating on an “ad hoc” basis.

Trying to write tougher rules that violate an appeals court’s ruling or reclassify the Internet as a phone service, he said, “invites delay that could tack on multiple more years before there are Open Internet rules in place. We are asking for comment on a proposed a course of action that could result in an enforceable rule rather than continuing the debate over our legal authority that has so far produced nothing of permanence for the Internet.”

Advocates of stronger online rules have criticized Wheeler’s draft, which would let companies strike “commercially reasonable” deals to provide faster Internet access for some users of the Web. In his post on Tuesday, Wheeler said that the FCC would ban deals that hurt some consumers in order to create new “fast lanes” or make people pay more, as well as special treatment for affiliate companies or limits on free speech.

“If anyone acts to degrade the service for all for the benefit of a few, I intend to use every available power to stop it,” Wheeler wrote.

Cable lobbyist praises private Internet: The infrastructure of the Internet should stay in private companies’ hands, not the government’s, according to the country’s top cable lobbyist. National Cable and Telecommunications Association President Michael Powell said at the group's annual Cable Show on Tuesday that the privately owned nature of the Web means that “it grows and thrives, watered by private capital and a light regulatory touch.”

“It does not depend on the political process for its growth, or the extended droughts of public funding,” he added. “This is why broadband is the fastest deploying technology in world history, reaching nearly every citizen in our expansive country.”

The comments were a rebuke to some calls for local governments to build municipal Internet networks for their citizens. In the New York Times last weekend, Harvard Law School professor Susan Crawford suggested that the networks could be an attractive option for people who think the FCC’s new net neutrality rules are too weak.

Tech groups praise SCOTUS patent rulings but want more: Advocacy groups representing tech companies large and small praised two Tuesday rulings from the Supreme Court that make it easier for courts to invoke “fee-shifting” in meritless patent infringement cases.

Jon Potter, president of the Application Developers Alliance, said that the rulings were “an important but modest change,” and Computer and Communications Industry Association counsel Matt Levy said they “make the current situation better, because they give judges more discretion in awarding fees than the previous rule.”

But the companies still want more. Internet Association CEO Michael Beckerman said he welcomed the rulings, but “legislation is needed to fully address the problem of patent troll tactics that drive up litigation costs for the purpose of extracting nuisance settlements.”

Senate Dems press FCC on bulk phone unlocking: The FCC should make sure that wireless companies allow third-party resellers to unlock bulk quantities of cellphones, five Senate Democrats said in a letter on Tuesday. Sens. Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Amy Klobuchar (D-Minn.), Mark Warner (D-Va.) and Ed Markey (D-Mass.) referenced reports that AT&T had prevented people from unlocking iPhones in bulk, which can make the used devices much more expensive.

“We strongly believe consumers should be able to realize the value in the mobile devices they already own in the same way consumers enjoy most personal and real property,” they wrote. “Accordingly, we should work to promote consumers’ ability to engage in business with legitimate resellers.”

 

ON TAP

The New America Foundation is hosting an event on technology and higher education starting at 9:00.

The Supreme Court will hear arguments on a new patent case, Akamai Technologies v. Limelight Networks, at 10:00 a.m.

In the afternoon, FCC Chairman Tom Wheeler is scheduled to deliver remarks at the cable industry’s conference in Los Angeles.

At 6:30, Reps. Mario Diaz-Balart (R-Fla.) and Mick Mulvaney (R-S.C.) will join FWD.us and the Partnership for a New Economy for an immigration reform event.

 

IN CASE YOU MISSED IT

As Congress attempts to change the patent litigation system, the Supreme Court is making it easier for companies that were unreasonably sued for patent infringement to get their attorneys fees paid for.

The Supreme Court on Tuesday seemed willing to restrict the ability of police officers to search cellphones without a warrant.

The Obama administration is offering more details about a new policy shift for the way spies treat software glitches and bugs they come across.

Sen. Al Franken (D-Minn.) called a proposal at the FCC to allow Internet “fast lanes” an “affront to net neutrality" that will "destroy" the open Internet.

MasterCard is paying lobbyists to focus on the growing digital currency bitcoin, according to federal lobbying disclosure records.

 

Please send tips and comments to Kate Tummarello, katet@thehill.com, and Julian Hattem, jhattem@thehill.com

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