Tech frets as clock ticks on patent reform

Anxiety is rising in the tech industry about the fate of patent reform.

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The Senate Judiciary Committee has repeatedly delayed work on legislation that would crack down on “patent trolls” that critics accuse of using frivolous litigation to shake down companies for cash.

Committee Chairman Patrick Leahy (D-Vt.) is trying to strike a deal to garner broad support for his patent reform bill, but he has delayed action multiple times to buy time for more negotiations.

Tech companies and trade groups are hoping for a breakthrough but know that time is running out.

Speaking in a Google hangout last month, Sen. Charles Schumer (D-N.Y.) — a Judiciary Committee member and vocal advocate for patent reform — said the committee would have to pass Leahy’s bill by the end of May for the full Senate to vote on it this year.

Though the markup of the patent bill was originally scheduled for late March, Leahy’s multiple delays have now pushed the bill’s consideration back to the second week of May.

Leahy is working behind the scenes to reach compromises on the more contentious aspects of patent reform in hopes of getting a strong, bipartisan vote that could propel it to the Senate floor.

One of the biggest sticking points is "fee shifting," or requiring the losing party of a meritless patent infringement lawsuit to pay the winner’s fees. Schumer and Sen. John Cornyn (R-Texas) have been working on a bipartisan compromise on the issues, giving hope to reform advocates that a comprehensive agreement is near.

Leahy is especially concerned with getting votes from the committee’s Democrats, some of whom fear reforms like fee shifting could close off the courtroom to small inventors. Democratic backing for Leahy’s bill could persuade Senate Majority Leader Harry Reid (D-Nev.) to bring it to the floor for a vote.          

Major players in the tech industry are prodding the senators to move forward.

Microsoft Deputy General Counsel Horacio Gutierrez, in a blog post this week, encouraged the senators "to approve the emerging bipartisan compromise and to send meaningful patent litigation reform to the full Senate."

"We strongly believe it is important for this set of reforms to be enacted now," he wrote.

Microsoft was one of 400 companies and groups that signed onto a letter to Leahy and Senate Judiciary Committee ranking member Chuck Grassley (R-Iowa) last week pressing for action on the bill.

“We urge your strong support for bipartisan legislation that provides urgently needed relief and reform, and encourage your continued efforts until the job is done and the bill becomes law,” the companies wrote.

Tech companies are also hoping that recent Supreme Court decisions, which could achieve some of the same goals as patent reform measures in Congress, won’t convince senators that reform isn’t needed.

In a statement applauding those rulings, Yahoo Vice President Kevin Kramer warned that Congress still needed to act.

“There is no single silver bullet that can end the abusive patent litigation that for the last several years has plagued large and small companies across America,” Kramer said.

Many remain confident that the patent bill will move out of committee. Schumer told that The Hill that the negotiators are close to a comprehensive agreement.

“We’re not on the one yard line, but we’re in the red zone,” he said, adding that he is “very hopeful that we can get this done next week.”

Tech lobbyists are hoping the optimists carry the day.

“Sure, a delay makes us anxious, but we are patient,” said Matt Tanielian, executive director of the Coalition for Patent Fairness, which includes Google, Cisco and Oracle.

“We are very confident of the outcome, and that’s what matters,” he said, pointing to the commitments from Schumer, Cornyn, Leahy and Grassley about the need to get patent reform across the finish line.

Other senators see less of a need to get something done in the short term.

“This subject is immensely complicated with a lot of moving parts and advocacy from very different and diametrically opposed points of view,” Sen. Richard Blumenthal (D-Conn.), a member of the Judiciary panel, told The Hill.

“Whatever the time is necessary to try to get it right, that’s what we should do,” he said.

“There’s definitely a feeling that we should move forward, but we don’t have a deadline.”

Blumenthal pointed to the recent Supreme Court decisions on fee shifting. Those rulings “have to be taken into consideration,” he said.

One patent lobbyist said Leahy’s most important task is winning over his Democratic colleagues.

“As much as proponents of patent litigation reform want a bill as fast as possible, it doesn’t help for Chairman Leahy to get a bill out of committee with only modest Democratic support,” the lobbyist said.

“Leahy is a smart legislator. He knows time is not his friend on this, but he also knows that, if it is not done with Democratic support, it will be DOA.”

Reform advocates charge that the delays and roadblocks are the handiwork of their opponents.

“The patent abuse industry is a multibillion-dollar industry that sees that its business model is about to be struck down,” said Michael Petricone, senior vice president of government and regulatory affairs for the Consumer Electronics Association.

That trade group is one of the leading voices for patent reform in Congress, and includes Google and Cisco.

Petricone said the Senate Judiciary Committee is seeing “significant pushback” because “the patent trolls are scared … and pulling out all the stops” in a last-ditch attempt to derail the bill.

One pro-reform lobbyist said the attempts to stop the bill are actually helping the reform efforts.

“The opposition has overplayed its hand with endless edits and requests,” the lobbyist said, because people recognize that it’s “an effort at obstruction.” 

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