Senate Judiciary Committee Takes Up, Then Tables, Patent Reform

By Andrew Williams --

Earlier today, the Senate Committee on the Judiciary held an Executive Business Meeting in which the Patent Transparency and Improvements Act was considered, then held over for another week.  Nevertheless, several members of the committee provided comments indicating where they stand on the issue.  While everyone expressed the opinion that patent trolls "need to go," and almost everyone believed that legislation was possible this year, there were a few voices of caution.  In addition, there were many references to undisclosed "staff-level discussions," with the consensus being that these discussions were being made in good faith, but that they were still on-going.

After the initial matter of discussing judicial and executive nominations (some of which were voted on, and some of which were held over), Chairman Leahy provided his statement on the issue (a copy of which can be found at the committee's website).  After commenting on how so-called "patent trolls" are harming businesses in his state, Vermont, he pointed out that he was working closely with other members of the committee on a Manager's Amendment to incorporate additional provisions into his bill.  For example, Leahy and Lee's Patent Transparency and Improvements Act does not currently contain any provision related to fee-shifting, so presumably one will be included.  He also mentioned that he had convened a series of briefings in the past few months, with the outcome being an expectation of incorporating changes to the "customer stay" provision in the bill.  Sen. Leahy expressed appreciation for the different perspectives that have been expressed, including those of inventors, small businesses, federal judges, and the university community.  He at least professed the desire to craft a properly tailored bill that will deter abusive conduct while that the same time not harm legitimate businesses seeking to enforce their rights.

After Sen. Leahy's comments, Sen. Grassley spoke out in support of patent reform legislation.  He indicated that he was willing to work on compromise language, but that any such compromise could not be so weak as to be ineffective to deter so-called "trolls."  These comments prompted Sen. Leahy to bring up the example of Robert Kearns, a sole-inventor who obtained patents on the intermittent windshield wiper after working on his invention in the proverbial basement.  Mr. Kearns spent most of his adult life asserting his patents against Ford and Chrysler, accusing them of stealing his ideas.  Sen. Leahy's illustration was apropos.  If Mr. Kearns were to have brought his suit in today's climate, it seems more than likely that the automobile industry would have labeled his activities as "troll-like."  This is why the process of narrowly tailoring legislation is so difficult -- just how do you differentiate between legitimate and illegitimate patent assertion when Mr. Kearns' activities could be characterized either way.  Of course, the patent community has reason to be concerned when Sen. Leahy invoked Potter Stewart's infamous proclamation, in this case as applied to patent trolls -- "I know it when I see it."

Sen. Feinstein was the first Senator to seriously express concern and caution over the possibility of patent litigation reform.  She indicated that she was between "sixes and sevens on this" issue.  Her dilemma stems from the fact that she represents California, which according to her, accounts for 26% of U.S. patents.  Moreover, her state apparently has the top five cities in the country with regard to participation in the patent system, with another three cities in the top ten.  Nevertheless, she recognizes that there is a growing "patent troll" problem, despite the recent passage of the AIA.  She expressed the desire to change incentives for "trolls," but to not harm legitimate patent holders.  Sen. Feinstein concluded by noting her conflicting interests.

Sen Hatch expressed optimism that the Senate could craft a bipartisan solution.  Not surprisingly, he highlighted the need for fee-shifting, and addressing the issue of fee-shifting "recovery-proof" parties.  Sen. Hatch warned that we need to protect against insolvent shell companies by holding the real-parties-in-interest accountable.  Sen. Cornyn also expressed optimism of getting something done this year despite all the talk of a division between the parties, and the typical lament that nothing happens in election years.

In his remarks, Sen. Schumer suggested that he would hold the Committee accountable for passing real reform.  If any provision is introduced that is not meaningful, Sen. Schumer indicated that he will be the first to speak out against it.  He indicated that this is an issue of vital importance, and credited the patent system as the reason that the U.S. has the foremost economy in the world.

Finally, Sen. Klobuchar provided perhaps the bleakest picture of the so-called "patent-troll" problem.  However, as when most individuals throw around statistics and antidotes about this problem, she provided very little support for her allegations.  For example, she stated as fact that 62% of all patent lawsuits initiated last year were by trolls.  However, as we have noted often in this forum, these numbers are far from certain, and they (along with the reasons behind them) have been hotly contested by both sides of the issue.  Moreover, Sen. Klobuchar cited as an example of abusive tactics the plight of a maker of medical devices for babies being targeted by the owner of a patent with a picture of a truck on the front.  Even though no more detail was provided, it is presumed that she is referring to the case of Rydex Technologies suing Medtronic based on the sale of its insulin pumps, because allegedly the pumps used similar technology as that for monitoring how tractor trailer trucks are fueled.  The technology apparently related to wirelessly transmitting information to a remote device about fluid delivery.  Without speaking to the merits of that case (which apparently settled), this example betrays the danger in oversimplifying any dispute for dramatic effect.  Sen. Klobuchar ended up disparaging all patent attorneys when she reported on a meeting with 30 or so patent lawyers, indicating sarcastically:  "that was fun."  However, instead of feeling slighted, this author felt as though she was speaking directly to him when she apologized for that comment to any "patent lawyers watching on C-Span."

In all, the committee's comments regarding the need for caution was refreshing, especially in view of the speed with which the Innovation Act passed through the House.  Nevertheless, stating an interest in narrowly tailoring legislation is one thing, but making it reality is another.  As always, we will continue to monitor the progress of this bill, and any amendments that are made to it.

Comments

[O'Sullivan]

Thank you for your excellent review and synopsis. Very much appreciated!

[staff]

'patent trolls "need to go,"'

infringers and their paid puppets’ definition of ‘patent troll’:

anyone who sues us for stealing their invention

All this talk about trolls is just spin control by large infringers and their paid puppets to cover up their theft.

http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=276448190&m=276545654&live=1
http://www.npr.org/2013/11/06/243022966/secret-persuasion-how-big-campaign-donors-stay-anonymous

The patent system now teeters on the brink of lawlessness. Call it what you will...patent hoarder, patent troll, non-practicing entity, shell company, etc. It all means one thing: “we’re using your invention and we’re not going to stop or pay”. It’s a pure red herring by large invention thieves and their paid puppets to kill any inventor support system. Their goal is to legalize theft. The fact is, many of the large multinationals and their puppets who defame inventors in this way themselves make no products in the US or create any American jobs and it is their continued blatant theft which makes it impossible for the true creators to do so. To infringers the only patents that are legitimate are their own -if they have any. Meanwhile, the huge multinationals ship more and more US jobs overseas.

It’s about property rights. They should not only be for the rich and powerful -campaign contributors. Our founders: Jefferson, Franklin, Madison and others felt so strongly about the rights of inventors that they included inventors rights to their creations and discoveries in the Constitution. They understood the trade off. Inventors are given a limited monopoly and in turn society gets the benefits of their inventions (telephone, computer, airplane, automobile, lighting, etc) into perpetuity and the jobs the commercialization of those inventions bring. For 200 years the patent system has not only fueled the US economy, but the world’s. If we weaken the patent system, we force inventors underground like Stradivarius (anyone know how to make a Stradivarius violin?) and in turn weaken our economy and job creation. Worse yet, we destroy the American dream -the ability to prosper from our ingenuity for the benefit of our families and communities. To kill or weaken the patent system is to kill all our futures. Show me a country with weak or ineffective property rights and I’ll show you a weak economy with high unemployment. If we cannot own the product of our minds or labors, what can we be said to truly own. Life and liberty are fundamentally tied to and in fact based on property rights. Our very lives are inseparably tied to our property.

Prior to the Supreme Court case eBay v Mercexchange, small entities had a viable chance at commercializing their inventions. If the defendant was found guilty, an injunction was most always issued. Then the inventor small entity could enjoy the exclusive use of his invention in commercializing it. Unfortunately, injunctions are often no longer available to small entity inventors because of the eBay decision so we have no fair chance to compete with much larger entities who are now free to use our inventions. Essentially, large infringers now have your gun and all the bullets. Worse yet, inability to commercialize means those same small entities will not be hiring new employees to roll out their products and services. And now those same parties who killed injunctions for small entities and thus blocked their chance at commercializing now complain that small entity inventors are not commercializing. They created the problem and now they want to blame small entities for it. What dissembling! If you don’t like this state of affairs (your unemployment is running out), tell your Congress member. Then maybe we can get some sense back into the patent system with injunctions fully enforceable on all infringers by all patentees, large and small.

Those wishing to help fight big business giveaways should contact us as below and join the fight as we are building a network of inventors and other stakeholders to lobby Congress to restore property rights for all patent owners -large and small.

For the truth about trolls, please see http://truereform.piausa.org/default.html#pt.
http://piausa.wordpress.com/
http://www.hoover.org/publications/defining-ideas/article/142741
http://ssrn.com/abstract=1792442

[Brade]

Who paid the last guy to say that? Some company with a lot of patents who doesn't actually make anything?

[Gallagher Intellectual Property Law]

It's not about patents. It's about litigation, tort reform. Viewing litigation abuse as a patent problem is extremely short sighted and harmful to legitimate interests.

[Skeptical]

Brade,

Are you aware that actually making anything is not required under patent law?

[James Adam Huber]

All I know is, I will always be a step ahead because I am an inventor. Not a guy who came up with a good idea . I happen to be poor, but that does not make me a troll. My piece of the pie will continue to grow as I grow. But that doesn't mean I get to eat it. When I finally do, I will get the pleasure of producing products to actually HELP people. Not to bamboozle them with cheap fixes that break because a good idea was ruined by a get rich quick sleezy company just trying to pull the last bottom dollar out of the not so wealthy individuals pocket. Who came up with using plastic as a filler in BABY food!!!???? No , you're not going to blame that on one single so called troll. That's a rich , bamboozling , lie spewing , money troll. I hold not one patent. But I sure am a damn great inventor . It's too bad my own government is so money hungry that they can't even help those who weren't born with a silver spoon in their mouth to have mammy and pappy sign off on all their crazy cool trinkets needing funding. Instead, they fear they could look like a wimp in the playground sticking up for the new kid cause he just happened to find a new way to have fun with the same damn toys everyone else plays with. So they choose the option of letting the other guys take the toy away completely so the new kid sits and watches as the kids keep playing but also using the new trick they learned. I swear, watching the way this world is run, is no different than watching all the kids play in the sand box. That's mine! No ! That's mine! Where the hell is the principal !? Probably watching from the office playing with his new gadget he took from that Blue collar kid who wasted so much time tinkering and not listening to his so called teacher's every command.

[Skeptical]

"I hold not one patent. But I sure am a damn great inventor"

Maybe not nearly so great as you think.

It appears that you do not understand the real world.