Patent reform bill dealt fatal blow in Senate

Senators delivered a potential deathblow to patent reform on Wednesday as the Judiciary Committee postponed work on the tech industry’s top legislative priority.

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Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) said weeks of negotiations on a compromise had reached a dead end and announced he was yanking the bill from the panel’s legislative agenda.

“I have said all along that we needed broad bipartisan support to get a bill through the Senate,” Leahy said in a statement.

“Regrettably, competing companies on both sides of this issue refused to come to agreement on how to achieve that goal.”

One person familiar with the negotiations said Senate Majority Leader Harry Reid (D-Nev.) told Leahy he would not bring the legislation to the floor due to objections from the pharmaceutical industry and trial lawyers.

“We’re trying to protect people from patent trolls,” Leahy said off the Senate floor on Tuesday, but “too many special interests don’t want to.”

Leahy’s bill — the Patent Transparency and Improvements Act — takes aim at “patent trolls” that profit by bringing and threatening to bring frivolous patent infringement lawsuits. Internet companies have clamored for legislative reforms that they say would rein in companies that exist solely for the purpose of applying for patents and then filing lawsuits.
 
The House passed its own patent reform bill, House Judiciary Committee Chairman Bob Goodlatte’s (R-Va.) Innovation Act, at the end of 2013, spurring optimism that it could overcome the partisan fighting that has brought down other legislation.

While Leahy’s bill was initially widely supported, some lawmakers — especially Democrats on the Senate Committee — began to back away from it as Leahy worked to include contentious reform proposals from other members of the committee.

Leahy repeatedly delayed consideration of the bill in recent weeks as he sought a bipartisan deal; he had hoped to advance the legislation out of committee in a strong bipartisan vote that would make a compelling case for Reid to bring it to the floor.

Sens. Charles Schumer (D-N.Y.) and John Cornyn (R-Texas) had worked with Leahy since late March on some of the more contentious provisions, including one that would require the loser of a meritless infringement case to pay the winner’s fees.

According to people familiar with the discussions, Leahy’s office was working on language as recently as Tuesday night with the hopes of having a compromise manager’s amendment ready for Thursday’s scheduled markup.

That compromise was never found, Leahy said.

“If the stakeholders are able to reach a more targeted agreement that focuses on the problem of patent trolls, there will be a path for passage this year, and I will bring it immediately to the Committee.”

Goodlatte — who had warned that the House would not support a weak patent reform bill from the Senate — urged the upper chamber "to work with us on this issue instead of closing doors to meaningful patent reform."

“It is extremely disappointing to hear that the Senate has once again delayed action on legislation to combat the ever increasing problem of abusive patent litigation," Goodlatte said.

He said his patent reform bill "was publicly vetted through multiple congressional hearings and discussion drafts, and has the support of 325 members of Congress and the president" and "should serve as a bipartisan roadmap for the Senate Judiciary Committee."

Senate Judiciary Committee ranking member Chuck Grassley (R-Iowa) said he was "surprised and disappointed that the Senate Democratic leadership is not willing to move forward on a bill that we've worked on so hard and were ready and expecting to mark up tomorrow."

"We put in a good faith effort to get to this point, and it's too bad that the bill is being pulled from the agenda," Grassley said in a statement.

Cornyn blamed Senate Democratic leadership for Leahy’s decision to drop the bill.

“It’s disappointing the majority leader has allowed the demands of one special interest group to trump a bipartisan will in Congress and the overwhelming support of innovators and job creators,” he said in a statement, pledging “to work in earnest with members of both parties to achieve meaningful patent reform.”

Schumer, who has been a vocal advocate for patent reform, said he wasn’t giving up.

“Abuse of the patent system is a complex but very serious problem that needs to be solved before more businesses are hurt," he said in a statement.

"We made a lot of good progress over the last month, and I will continue to work with Sen. Cornyn and colleagues on both sides of the aisle to come up with a strong, comprehensive solution.”

The tech industry expressed surprise and disappointment at Leahy’s decision to drop the bill, and pledged to keep working to get patent reform through the Senate. They said action is critical because businesses spend so much time and money defending against “patent trolls.”

“The choice of special interests over small businesses was the wrong decision, but we aren’t giving up the fight,” Main Street Patent Coalition manager Michael Meehan said in a statement.

Meehan’s group includes the National Retail Federation, the Application Developers Alliance, the National Restaurant Association and others.

“Main street business needs patent reform and we will continue to work toward that goal,” Meehan said.

Some advocates conceded that patent reform legislation might have to wait until 2015.

“It looks like a solution will have to wait until the next session of Congress,” Matt Levy, patent counsel at the Computer and Communications Industry Association, said.

Levy’s group represents companies such as Google, Facebook, Microsoft and Yahoo.

“This fight certainly isn't over, because businesses all over the country … are continuing to hand over billions of dollars a week to patent trolls,” he said, adding that he’s “stunned and disappointed” at Leahy’s decision to drop the bill.

— This story was first posted at 12:44 and has been updated.